Natl Assn Mftrs v. DOL

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 17, 1998 Decided November 3, 1998

No. 97-5157

National Association of Manufacturers,

Appellee

v.

Department of Labor,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 95cv00715)

Katherine S. Gruenheck, Attorney, U.S. Department of

Justice, argued the cause for appellant. On the briefs were

Frank W. Hunger, Assistant Attorney General, Mary Lou

Leary, U.S. Attorney at the time the briefs were filed, and

Michael Jay Singer, Attorney, U.S. Department of Justice.

Behnam Dayanim argued the cause for appellee. With

him on the brief was Hamilton Loeb.

Before: Williams, Henderson and Garland, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Garland.

Garland, Circuit Judge: The United States Department of

Labor ("DOL") appeals from an award of attorneys' fees to

the National Association of Manufacturers ("NAM") under

the Equal Access to Justice Act ("EAJA"), 28 U.S.C.

s 2412(d)(1)(A). If NAM were considered as a separate

entity, it would unquestionably be eligible for an EAJA

award. Some of its members, however, would not be. DOL's

principal contention is that a trade association suing on behalf

of its members is only eligible for attorneys' fees if both the

association and its members satisfy the statutory criteria.

We decline to adopt such a per se rule. Although there

may be cases in which an association's eligibility for an award

will depend upon the eligibility of its members--for example,

when an association is merely litigating as a "front" for those

members--there is no evidence that this is such a case.

Accordingly, we affirm the award of attorneys' fees and

remand the case for further proceedings consistent with this

opinion.

I

NAM is an incorporated trade association representing

over 13,000 employers in various industries. Its members

range from small start-up companies to large multinational

corporations. On April 14, 1995, NAM filed a complaint in

district court challenging regulations adopted by DOL

to implement congressional amendments to the H-1B visa

program, which allows American companies to employ

aliens in certain "specialty occupations." See 8 U.S.C.

s 1101(a)(15)(H)(i)(b). To establish its standing to sue, NAM

asserted it was acting as a representative of its members,

whose ability to employ aliens was burdened by the regula-

tions. See App. 9 (Pl.'s Compl., p 11).

After both sides moved for summary judgment, the district

court held that DOL had promulgated six components of the

H-1B program without complying with the notice and com-

ment requirements of the Administrative Procedure Act, 5

U.S.C. s 553(b)(3), and granted partial summary judgment

for NAM. The court granted summary judgment for DOL

on the remaining issues. Neither side appealed the decision

on the merits, and NAM filed an application for an award of

attorneys' fees and other expenses under the EAJA.

The EAJA provides that a court

shall award to a prevailing party other than the United

States fees and other expenses ... incurred by that

party in any civil action ... brought by or against the

United States ..., unless the court finds that the posi-

tion of the United States was substantially justified or

that special circumstances make an award unjust.

28 U.S.C. s 2412(d)(1)(A). The EAJA defines an eligible

"party" under the Act to include "any partnership, corpora-

tion, association, unit of local government, or organization, the

net worth of which did not exceed $7,000,000 ... and which

had not more than 500 employees at the time the civil action

was filed...." Id. s 2412(d)(2)(B)(ii). Thus, a court must

grant an EAJA award: (1) for fees "incurred," (2) by an

eligible "party," (3) who "prevail[s]" against the government,

(4) unless the position of the government was "substantially

justified," or (5) unless "special circumstances" make an

award unjust.

In the district court, the government opposed NAM's re-

quest for fees on the second and fourth grounds: that NAM

was not an eligible party because certain of its members, who

the government said were the "real parties in interest" in the

litigation, exceeded the statute's net worth and employment

ceilings; and that the government's position in the litigation

was substantially justified. The government did not dispute

below, and does not contest here, that NAM prevailed in the

litigation for purposes of the Act. See, e.g., Maduka v.

Meissner, 114 F.3d 1240, 1241 (D.C. Cir. 1997) ("A party has

'prevailed' if: (1) the party received a significant part of the

relief it sought; and (2) the lawsuit was a catalytic, necessary

or substantial factor in obtaining that result.") (citation omit-

ted).

The district court rejected the government's arguments.

See National Ass'n of Mfrs. v. United States Dep't of Labor,

962 F.Supp. 191 (D.D.C. 1997). The court held that NAM

was eligible for attorneys' fees because the association itself

met the eligibility criteria, and because the EAJA applies

those criteria to associations rather than to their individual

members. The court declined to apply a "real party in

interest" exception merely because NAM's members stood to

benefit from a favorable ruling in the litigation. See id. at

194-95 & n.5. The court also rejected the argument that

DOL's position in the litigation was substantially justified,

noting that a "government agency that overtly disregards the

notice requirements of the APA cannot credibly argue that

[its] underlying actions were substantially justified." Id. at

197. The district court concluded that NAM was entitled to

$41,145.59 in fees and other expenses, a figure which DOL

does not dispute.

II

On appeal, DOL does not challenge the district court's

determination that the government's position was not "sub-

stantially justified." It does, however, contest the court's

determination that NAM was an eligible "party" under the

EAJA. And it seeks to raise two additional defenses it

acknowledges it did not directly raise below: that "special

circumstances" make the award of fees here unjust, and that

NAM has not "incurred" fees because it has been represented

by a law firm, acting pro bono, that has agreed to forego any

fees unless NAM receives an EAJA award. While we gener-

ally review a district court's award of attorneys' fees under

the EAJA only for an abuse of discretion, see Pierce v.

Underwood, 487 U.S. 552, 563 (1988), we review an award de

novo insofar as it rests on conclusions of law, such as an

interpretation of the statutory terms that define eligibility for

an award, see Love v. Reilly, 924 F.2d 1492, 1493 (9th Cir.

1991); see generally Pierce, 487 U.S. at 558.

We consider the government's contention that NAM is not

an eligible party in this Part, and address the government's

two additional defenses in Part III below.

A

As noted above, the EAJA states that an "association" is an

eligible party if it had, at the time the action was filed, a net

worth no greater than $7,000,000 and a work force no larger

than 500 employees. The government does not dispute that

NAM, itself, meets both the net worth and employment

criteria of the statute. See App. 13-14 (NAM Aff. pp 6-7).

NAM, on the other hand, does not dispute that "some--

although not all--of its members and affiliates possess net

worths and/or numbers of employees that would place them

outside the definition of 'party' contained in the EAJA."

App. 21 (NAM Letter).

An association may sue the government either to redress

its own injuries or to redress injuries to its members. See

United Food & Commercial Union Local 751 v. Brown

Group, Inc., 517 U.S. 544, 551-52 (1996). An association's

standing to sue in the latter circumstance is generally re-

ferred to as "associational" or "representational" standing.

See, e.g., Pennell v. City of San Jose, 485 U.S. 1, 7 n.3 (1988).

DOL argued below that when an association relies only on

representational standing, the association's members are the

real parties in interest to the litigation. In those circum-

stances, DOL contended, a court must look behind the associ-

ation and, if a single member has assets or employees above

the listed ceilings, deny an EAJA award. In this court,

DOL's opening brief rephrases the argument somewhat, ar-

guing for a "rebuttable presumption" that an association's

members are the real parties in interest in a suit litigated by

the association on their behalf. "Rebuttable," however, may

not be the most accurate way to characterize the presumption

the government seeks. In its reply brief, the government

explains that the burden this presumption would impose on

trade associations "to show complete independence and free-

dom from their members is virtually impossible to meet."

DOL Reply Br. at 14.

Whether cast as a rebuttable or irrebuttable presumption,

the difficulty with the government's argument is that it

conflicts with the plain language of the statute, which ex-

pressly lists as eligible for fees any "association ... the net

worth of which did not exceed $7,000,000 ... and which had

not more than 500 employees." 28 U.S.C. s 2412(d)(2)(B)(ii)

(emphasis added). The statute thus places its eligibility

ceilings on the association itself. It does not, for example,

refer to the net worth "of whose members" but to the "net

worth of which"--the antecedent of "which" being "associa-

tion." There is no mention anywhere in the statute or

legislative history of a need to consider the net worth or

employment totals of an association's individual members.1

The government does not dispute, moreover, that an associ-

ation is eligible for a fee award without regard to the eligibili-

ty of its members in at least some circumstances--namely,

when it sues for injury to the association itself. But if an

association is properly assessed on its own merits in some

circumstances, the government's argument requires more

than just an unusual definition of the single word "associa-

tion." Rather, it requires the insertion of an entire "except"

clause: e.g., that an association is eligible if its net worth does

not exceed $7,000,000, "except if it is suing in a representa-

tional capacity, in which case the net worth of each of its

members must also not exceed $7,000,000." There is, of

course, no such "except" clause in the statute, and we are

without authority to insert one.

Nor is there any reason to believe Congress intended such

an exception. "Representational" suits by associations, in-

__________

1 For example, the legislative history directs that " 'net worth'

[be] calculated by subtracting total liabilities from total assets," and

that "[i]n determining the value of assets, the cost of acquisition

rather than fair market value should be used." H.R. Rep. No.

96-1418, at 15 (1980). But it never instructs that in doing this

calculation, the net worth of an association's individual members

should be considered.

cluding trade associations, were well-recognized by the time

the EAJA was passed in 1980. See, e.g, Hunt v. Washington

State Apple Adver. Comm'n, 432 U.S. 333, 342 (1977) ("If the

Commission were a voluntary membership organization--a

typical trade association--its standing to bring this action as

the representative of its constituents would be clear under

prior decisions of this Court."). Many of the best-known

cases brought by associations had been brought in their

representational capacities. See, e.g., id.; Simon v. Eastern

Ky. Welfare Rights Org., 426 U.S. 26, 40 (1976); Warth v.

Selden, 422 U.S. 490, 511 (1975); National Motor Freight

Ass'n v. United States, 372 U.S. 246, 247 (1963); NAACP v.

Button, 371 U.S. 415, 428 (1963); NAACP v. Alabama ex rel.

Patterson, 357 U.S. 449, 459 (1958). Because we ordinarily

presume that Congress was aware of relevant Supreme Court

precedent at the time it considered legislation, see North Star

Steel Co. v. Thomas, 515 U.S. 29, 34 (1995); Cannon v.

University of Chicago, 441 U.S. 677, 699 (1979), it would be

surprising if Congress had intended to exclude such a wide

swath of cases from the EAJA without mentioning that fact

anywhere in the statute or legislative history.

In addition, were we to accept DOL's argument, nothing in

the statute would permit us to limit it to "trade" as compared

to other kinds of membership associations.2 Thus, for exam-

ple, an environmental organization suing in a representational

capacity would be barred from an EAJA recovery if any of its

individual members were personally wealthy--even if the

organization received no more than a small dues payment

from each of its members. See Gregory C. Sisk, The Essen-

tials of the Equal Access to Justice Act: Court Awards of

Attorney's Fees for Unreasonable Government Conduct (Part

One), 55 La. L. Rev. 217, 319 (1994). DOL does not expressly

dispute that its interpretation of the eligibility criteria would

__________

2 Indeed, to support its argument that NAM's members are the

real parties in interest, the government cites a case involving the

NAACP for the proposition that an association "is but the medium

through which its individual members seek to make effective the

expression of their views." DOL Br. at 16 (citing NAACP v.

Alabama ex rel. Patterson, 357 U.S. 449, 459 (1958)).

reach such cases. Instead, the government suggested at oral

argument that such cases should not concern us because

environmental groups are "largely" tax-exempt s 501(c)(3)

organizations, which are excepted from the EAJA's net worth

ceiling by another clause of the statute.3 DOL cites no

support for this assertion and, at least as to one of the

country's most well-known environmental groups, it is not

true. See Sierra Club Membership Information (visited

Sept. 23, 1998) <http: //ww2.sierraclub.org/mem-

ber/main.html>. In any event, environmental associations

are not the only ones at issue. There are many associations,

including non-profits, that are not "trade" associations but

nonetheless do not qualify for s 501(c)(3) status. See, e.g.,

Regan v. Taxation with Representation, 461 U.S. 540 (1983)

(affirming that non-profit groups engaged in substantial lob-

bying activities do not qualify for s 501(c)(3) treatment).

Again, it would be surprising if Congress had intended the

EAJA to exclude suits brought by such organizations in a

representational capacity, without mentioning the possibility

at all.4

Notwithstanding the absence of statutory language or legis-

lative history supporting its reading of the EAJA, DOL

contends that reading is necessary to conform the statute to

Congress' underlying purpose--to assist parties "for whom

__________

3 The EAJA provides that "an organization described in section

501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C.

s 501(c)(3)) exempt from taxation under section 501(a) of such

Code, or a cooperative association as defined in section 15(a) of the

Agricultural Marketing Act (12 U.S.C. s 1141j(a)), may be a party

regardless of the net worth of such organization or cooperative

association...." 28 U.S.C. s 2412(d)(2)(B)(ii). There is no corre-

sponding exemption from the statute's employment ceiling.

4 Were we to accept DOL's reading of the statute, there also

would be no basis for applying it only to "associations," rather than

to all parties eligible for fees under the EAJA. By DOL's logic, for

example, a "unit of local government," otherwise eligible under 28

U.S.C. s 2412(d)(2)(B)(ii), would be disqualified from a fee award if

it sued the United States on behalf of its citizens and any one

citizen had a net worth exceeding the statutory ceiling.

cost may be a deterrent in vindicating their rights." DOL

Br. at 24 (quoting H.R. Rep. No. 96-1418, at 10 (1980)); see

also Unification Church v. INS, 762 F.2d 1077, 1082 (D.C.

Cir. 1985). Although such an appeal to congressional purpose

might be persuasive if the statutory terms were ambiguous or

open-ended, see, e.g., Florida Power & Light Co. v. Lorion,

470 U.S. 729, 737 (1985), here they are neither. Nor do we

agree that our interpretation subverts Congress' purpose.

We simply have no indication that Congress intended to

exclude small associations representing large members from

the benefits conferred by the EAJA. Indeed, the govern-

ment does not contest that Congress intended small associa-

tions with large members to benefit from the EAJA when

such associations sue on their own behalf. Nothing in the

words or legislative history of the statute indicates a congres-

sional intention to draw the distinction the government would

have us draw.

Two other Circuits have reached the same conclusion we do

regarding the meaning of the EAJA. See Texas Food Indus.

Ass'n v. United States Dep't of Agric., 81 F.3d 578, 581 (5th

Cir. 1996); Love, 924 F.2d at 1494. One Circuit, the Sixth,

has taken an opposing view. See National Truck Equip.

Ass'n v. National Highway Traffic Safety Admin., 972 F.2d

669 (6th Cir. 1992). But the Sixth Circuit takes the argument

even further than DOL would go, concluding that an associa-

tion is ineligible for a fee award if the aggregated net worth

and employment of all its members together exceed the

ceilings, even if no individual member exceeds them on its

own. Perhaps because the National Truck approach would

eliminate fee awards for virtually any association suing on

behalf of its members, the government has disavowed reliance

on the analysis of that case. See DOL Br. at 16.

The decision in National Truck was based in part on the

congressional purpose argument we rejected above. The

Sixth Circuit also contended that Congress' legislative intent

can be divined from the fact that the EAJA exempts agricul-

tural cooperatives and tax-exempt organizations from the net

worth criterion. See supra note 3. Based on that exemption,

the court concluded that Congress "intended for those organi-

zations only not to be aggregated under the net worth

equation." 972 F.2d at 674.

We disagree. The Sixth Circuit is correct that EAJA's

exemption of cooperatives and tax-exempt organizations im-

plies that Congress intended only those organizations to be

exempt from the net worth criterion. But the exemption

does not imply that Congress further intended the net worth

of the remaining organizations to be calculated on an aggre-

gated basis. The statute says that a cooperative or a tax-

exempt organization may be an eligible party "regardless of

the net worth of such organization," 28 U.S.C.

s 2412(d)(2)(B)(ii) (emphasis added). It does not say that

such an organization may be an eligible party regardless of

the aggregated net worth of its individual members. In

short, "[n]either the statute nor its legislative history sug-

gest[s] that the special eligibility rule for agricultural cooper-

atives and non-profits was motivated by concerns about ineli-

gibility resulting from the aggregation of employees and

assets." Texas Food, 81 F.3d at 581.

Finally, we consider DOL's argument that Unification

Church v. INS, 762 F.2d 1077 (D.C. Cir. 1985), which first

applied the "real party in interest" doctrine to EAJA fee

applications, compels us to look behind the association to its

individual members. In Unification Church, three EAJA-

eligible plaintiffs sought attorneys' fees after they prevailed

in an action to force the Immigration and Naturalization

Service to let them remain in the United States. The fourth

plaintiff, the Unification Church, was ineligible for fees be-

cause it employed more than 500 people. Under an agree-

ment among the plaintiffs, who were represented by the same

counsel, the Church assumed responsibility for all legal fees.

Because the Church was the only party that would pay fees in

the absence of an award, and thereby the only party that

would benefit if there were an award, the court held that "the

Church can fairly be characterized as the real party in

interest." Id. at 1082. And because the Church was the real

party in interest, but was ineligible for an award, all of the fee

applications were denied. To hold otherwise, we said, "would

open the door for the wholesale subversion of Congress's

intent to prevent large entities from receiving fees." Id.

This statement, the government contends, supports its argu-

ment here that, to prevent "subversion of Congress's intent,"

we must bar an association from recovering when it sues on

behalf of its large members.

There is, however, an important distinction between the

government's "real party in interest" argument in this case,

and the way Unification Church employed that doctrine.

Here, DOL argues that the fact that an association is litigat-

ing to benefit its members should be enough to require us to

look to the qualifications of those members. But in Unifica-

tion Church, we were trying to determine the " 'real party in

interest' with respect to fees," not with respect to the merits

of the underlying litigation. Id. at 1081 (emphasis added).

We made clear that the fact that the individual plaintiffs

"have rights at stake in the underlying case does not alleviate

our concerns, since the individual appellants have nothing at

stake in the award of fees...." Id. at 1082. And our

holding was that, "where the fee arrangement among the

plaintiffs is such that only some of them will be liable for

attorneys' fees, the court shall consider only the qualification

... of those parties that will be themselves liable for fees if

court-awarded fees are denied." Id. (emphasis added). In-

deed, in a subsequent case, we stressed that "the essential

language" in Unification Church was " 'fee arrangement

among the plaintiffs,' " and that "the essential question" in

our "real party in interest" analysis is "whether there is some

relationship or agreement among all or some of the various

plaintiffs, either explicit or implicit, permitting a plaintiff,

which would 'obviously not qualif[y] for an award, ... [to]

receive free legal services if its side were to prevail.' "

AARP v. EEOC, 873 F.2d 402, 405 (D.C. Cir. 1989); accord

Love, 924 F.2d at 1494 (holding that individual members of

association are real parties in interest only if they are liable

for association's attorneys' fees).

In short, although the "real party in interest" doctrine does

bar fee awards from which only ineligible parties would

benefit, it does not require us to rewrite the statute to

exclude eligible associations whenever their litigation benefits

ineligible members. Whether we consider the government's

argument as urging a per se rule, a presumption, or an

application of the "real party in interest" doctrine, we reject

the proposition that NAM is barred from receiving attorneys'

fees merely because it has members who could not receive

them.

B

In rejecting the government's broad contention, we do not

mean to suggest that courts should never look behind an

association to examine the eligibility of its individual mem-

bers. As even NAM conceded at oral argument, if an associ-

ation were no more than a "front" or a "sham" through which

ineligible entities pursued litigation and recovered fees, it

would be appropriate to pierce the associational veil and look

to the real parties in interest. Unification Church estab-

lished the principle that the "real party in interest" doctrine

applies when an ineligible party pays the fees for an eligible

party, and we agree with the government that the doctrine

may properly extend to an ineligible non-party (such as an

association member) who pays the fees of a party (such as an

association).5 We also would not preclude the possibility that

the principle could apply when an ineligible non-party con-

trols the litigation decisions of an eligible party, even if it

does not finance the litigation itself. See, e.g., United States

v. Lakeshore Terminal & Pipeline Co., 639 F. Supp. 958, 962

(E.D. Mich. 1986) (rejecting award to otherwise-eligible cor-

poration because of "active involvement" in litigation by cor-

poration's ineligible parent).

But none of those things occurred here. There was no

agreement by any of NAM's members to pay the costs of this

litigation. NAM submitted a sworn declaration to that effect,

see App. 28 (NAM Supp. Decl. p 9), and the district court so

found, see National Ass'n of Mfrs., 962 F. Supp. at 194. But

__________

5 NAM argues that the principle should apply only to parties.

Although it is true that only parties were involved in Unification

Church and AARP, neither opinion suggested that a non-party

could not be unmasked as the real party in interest.

for the willingness of NAM's attorneys to take the case pro

bono, their fees would have been paid out of the association's

general operating budget. See App. 28 (NAM Supp. Decl.

p 9). Hence, there is no concern that NAM's ineligible mem-

bers will be the beneficiaries of an award of fees to the

association. See Unification Church, 762 F.2d at 1082.6

Lacking evidence of a formal fee arrangement, the govern-

ment implicitly argues that the dues paid by NAM's members

are equivalent to the fee agreement in Unification Church.

See DOL Reply Br. at 6 n.1, 7, 10. When an association uses

general revenues derived from membership dues to finance

litigation, however, it does not transform its members into

real parties in interest. Most important, payment of mem-

bership dues does not render a member liable for the costs of

a litigation. The membership dues argument is particularly

inapt in this case; membership dues clearly have not financed

this litigation because NAM's attorneys have not charged

NAM for their work.

There is also no support for the government's veiled accu-

sation that members of NAM controlled this litigation and

that NAM merely acted as their puppet. Founded in 1895,

NAM plainly was not established for the purposes of conduct-

ing this law suit. The association is an independent corpora-

tion, independently managed by its own officers and execu-

tives. See App. 27 (NAM Supp. Decl. p 4). Its Senior Vice

President filed an affidavit which declared that "NAM--and

not its individual members or affiliates--retained complete

responsibility and authority to direct the actions of its counsel

throughout this litigation." Id. at 29 (NAM Supp. Aff. p 11).

The district court made a specific evidentiary finding that

__________

6 The government points to a section of NAM's accounting

report, see App. 39-40, which indicates that "coalitions" of NAM

members occasionally fund "special projects." DOL speculates that

this case may be such a special project. In reply, NAM states that

the referenced coalitions primarily engage in lobbying, that none

has been involved in any litigation, and that none was involved in

this case. See NAM Br. at 17 n.12. Neither the accounting report,

nor anything else in the record, contradicts NAM's representation

to this court.

NAM's individual corporate members "played no part in the

legal prosecution or decision-making processes of this case."

962 F. Supp. at 194. And at oral argument, DOL conceded it

had no evidence that EAJA-ineligible members directed or

controlled this litigation.

The government seeks to avoid the consequences of this

lack of evidence through its rebuttable presumption argu-

ment. DOL asserts that it is "NAM's burden to establish its

real party status," not the government's burden to disprove

it. DOL Reply Br. at 13. Thus, DOL contends, not only

must NAM show that it is itself eligible under the net worth

and employment criteria, but it also has the burden of show-

ing that its individual members are not the real parties in

interest.

Even if NAM initially did bear such an additional burden,

which is questionable,7 NAM satisfied it by submitting a

declaration which stated, under penalty of perjury, that its

members were neither liable for the costs of the litigation nor

in control of it. See App. (NAM Supp. Decl. pp 9, 11). At

least in the absence of any reason to doubt such a declaration,

a fee applicant is not required to put on further evidence to

support this kind of negative proposition. At that point, if

not earlier, it was the government's burden to come forward

with evidence to the contrary. It never did so.

But, DOL complains, it is not to blame for failing to come

forward with evidence that NAM's members financed or

controlled the litigation. Rather, the fault lay with the dis-

trict court, which "abused its discretion by ruling on NAM's

fee application without first affording the government an

opportunity to conduct discovery on the question whether

__________

7 Cf. Love, 924 F.2d at 1494 (holding that although an associa-

tion has the burden of establishing its own eligibility, it does not

bear the burden of proving that each of its members is individually

eligible for fees). DOL cites AARP, 873 F.2d at 404, and Unifica-

tion Church, 762 F.2d at 1081-82, for the proposition that NAM

bears the burden of making an affirmative showing that it is the

real party in interest. DOL Br. at 14. But neither case even

mentions the issue of burden of proof.

NAM was the real party in interest." DOL Br. at 23. The

problem with this complaint is that the government never

sought discovery that would have carried the day for it on

that question.

The only discovery request DOL made to NAM was a

letter asking whether any of NAM's individual members "do

not meet the definition of 'party' under EAJA," and if so, to

identify them, their net worth and total number of employees,

and the proportion of NAM's membership they represent.

App. 23-24. In response, NAM's counsel "stipulate[d] ...

that some--although not all--of its members and affiliates

possess net worths and/or numbers of employees that would

place them outside of the definition of party contained in the

EAJA." App. 21 (NAM Letter). The response concluded:

"Unless you notify me to the contrary, I will understand that

this stipulation responds sufficiently to your inquiry." Id. at

22. The government did not send a reply, nor file a motion to

compel discovery.

The government did argue in its opposition to NAM's fee

application that "[a]t a minimum, plaintiff should be required

to provide (1) full information concerning its members' net

worths and numbers of employees; and (2) any evidence it

contends establishes that NAM, rather than NAM's mem-

bers, is the real party in interest in this litigation." Id. at 19-

20 (Def.'s Opp. to Pl.'s Attorneys' Fees Applic. at 13-14

[hereinafter DOL Opp.]). But NAM had already stipulated

that some of its members exceeded the net worth and em-

ployment ceilings; the additional information DOL sought in

this regard would not have made a material difference to its

position. Similarly, the evidence NAM "contends establishes

that NAM ... is the real party in interest" is nothing more

than the absence of a fee or control arrangement--a point

NAM also had already covered in its filed declaration. Be-

cause the government never sought any specific evidence

calculated to unearth financing or control of the litigation by

individual members of the association,8 and because it offers

no reason to suspect any such evidence exists, we have no

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8 The government complains, for example, that the district court

granted the fee award "without knowing whether there was an

reason to look behind the associational form to determine

NAM's eligibility for a fee award.

III

In addition to its contention that NAM is not an eligible

party for purposes of the EAJA, the Department of Labor

seeks to raise two further defenses it concedes it did not

directly raise below: that "special circumstances" make the

award of fees unjust, and that NAM has not "incurred" fees

because it has been represented by a law firm, acting pro

bono, that has not charged NAM for its services.

A

The EAJA disqualifies an applicant from an award of fees

if "the court finds that ... special circumstances make an

award unjust." 28 U.S.C. s 2412(d)(1)(A). The government

contends that the wealth and size of some of NAM's corpo-

rate members constitute such a "special circumstance," be-

cause it would be unjust to award attorneys' fees to NAM

when its members could have afforded to litigate on their

own.

The government "acknowledge[s] that [it] did not specifi-

cally refer to the 'special circumstances' provision below."

DOL Reply Br. at 16 (emphasis added). In fact, the govern-

ment did not mention the provision at all, and the district

court twice noted that "DOL did not assert the existence of

any special circumstances that would make a fee award unjust

or inequitable." 962 F. Supp. at 193; see also id. at 196 n.10.

Although we have some discretion to consider new arguments

on appeal, see Singleton v. Wulff, 428 U.S. 106, 121 (1976), we

do not do so in the absence of "exceptional circumstances"

that require such consideration "to achieve a just resolution."

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overlap in management teams and/or counsel for [NAM] and one or

more of its ineligible members." DOL Br. at 22. Yet, DOL never

sought to discover evidence of such an overlap. In the face of

NAM's declaration to the contrary, see App. 27 (NAM Supp. Decl.

p 4), there was no reason for the district court to presume an

overlap existed.

Kattan v. District of Columbia, 995 F.2d 274, 278 (D.C. Cir.

1993); see also District of Columbia v. Air Florida, Inc., 750

F.2d 1077, 1085 (D.C. Cir. 1984).9

There are no exceptional circumstances here. DOL con-

tends we should entertain its special circumstances argument

because "the substance ... is virtually the same as [the]

EAJA eligibility argument," namely, that it would be contrary

to Congress' intent to permit associations representing the

interests of large companies to receive EAJA awards. DOL

Reply Br. at 18. To the extent this argument really is merely

a reprise of the statutory eligibility argument, we see no

reason for reaching a different result, or--more accurately--

for reaching to reach a result on an issue not raised below.

The term "special circumstances" does not shed any more

light on Congress' intent regarding the treatment of associa-

tions than does the subsection that defines eligible parties,

and we decline to use that term to excise most representa-

tional standing cases from the coverage of the EAJA. It is

also particularly difficult to regard the "circumstances" ad-

vanced by the government here as "special," since they exist

in such a broad class of cases.

But contrary to DOL's contention, an argument based on

the EAJA's "special circumstances" defense is not really the

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9 United States Department of Labor v. Rapid Robert's Inc.,

130 F.3d 345 (8th Cir. 1997), cited by DOL, is not to the contrary.

Although in that case the Eighth Circuit did consider the "special

circumstances" defense even though DOL had not raised it below, it

did so as an "exception to the general rule" in order to avoid a

"miscarriage of justice." Id. at 348 (internal quotation marks

omitted). In Rapid Robert's, the court found that as a result of the

district court's ruling on the merits, which DOL did not appeal, the

defendant had "reaped a windfall by escaping its duty to pay for

clear violations of a valid statute." Id. at 349. "To add to that

windfall by requiring the government to pay attorneys' fees," the

court held, "would be patently unjust." Id. DOL makes no such

argument about the consequences of the district court's merits

ruling here, nor, as noted below, are there any other exceptional

circumstances that would justify abrogating the general rule against

considering issues for the first time on appeal.

same as one based on its eligible party criteria. The defense

was not intended to be applied across-the-board to an entire

class of cases, but rather to prevent the injustice of granting

an award in a particular case. As DOL itself notes, Congress

intended the "special circumstances" defense to "give[] the

court discretion to deny awards where equitable consider-

ations dictate an award should not be made." H.R. Rep. No.

96-1418, at 11. We must be particularly cautious about

reviewing for the first time on appeal an argument that

properly is first addressed to the equitable discretion of the

district court. If the argument had first been made below,

we would review the lower court's decision only for an abuse

of discretion. See, e.g., United States v. 27.09 Acres of Land,

More or Less, 43 F.3d 769, 771, 772 (2d Cir. 1994); cf. Pierce,

487 U.S. at 559 (holding that "substantially justified" defense

is reviewed for abuse of discretion). By first bringing its

claim here, DOL effectively asks us to weigh the equities de

novo. To consider such a request, however, would be to

encourage parties to forum shop between courts based on

their assessment of which has the longer "foot."10 We decline

to provide such encouragement, and hold that DOL has

waived its "special circumstances" defense by not raising it

below.

B

The government also argues that NAM is not entitled to a

fee award because it has been represented by a law firm,

acting pro bono, that has agreed to forego payment unless

NAM receives an EAJA award. This means, the government

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10 See Gee v. Pritchard, 36 Eng.Rep. 670, 679 n.1 (Ch. 1818)

(quoting Selden, Table Talk):

[E]quity is according to the conscience of him that is Chan-

cellor, and as that is larger or narrower, so is equity. 'Tis all

one, as if they should make his foot the standard for the

measure we call a Chancellor's foot; what an uncertain

measure would this be! One Chancellor has a long foot,

another a short foot, a third an indifferent foot; 'tis the same

thing in the Chancellor's conscience.

argues, that NAM has not "incurred" any fees, as required

for eligibility under the statute.

The government does not contend that parties may never

receive fees if they are represented by pro bono counsel, and

acknowledges the many cases in which this and other courts

have held that parties may recover EAJA fees to pay such

counsel. See DOL Br. at 26; see, e.g., AARP, 873 F.2d at

406; Ed A. Wilson, Inc. v. General Servs. Admin., 126 F.3d

1406, 1409 (Fed. Cir. 1997); SEC v. Comserv Corp., 908 F.2d

1407, 1415 (8th Cir. 1990); Watford v. Heckler, 765 F.2d 1562,

1567 n.6 (11th Cir. 1985); Cornella v. Schweiker, 728 F.2d

978, 987 (8th Cir. 1984). Instead, DOL asks that we limit fee

awards to two kinds of pro bono litigation: "where the client

is indigent or where the case is classified as public interest

litigation." DOL Br. at 26.

NAM does not qualify as indigent. Nor, contends the

government, can this case be classified as "public interest"

litigation. Yet, while the government assures us there are

"clear standards" by which to make the latter classification,

DOL Reply Br. at 19, it does not tell us what they are.

Would it make a difference in the government's classification

scheme if this lawsuit, which sought to make it easier for

certain aliens to obtain employment in the United States, had

been brought by an immigrants' rights organization rather

than an employers' organization? The government's briefs do

not help us to resolve the question.

We need not struggle with this issue here, however, as

DOL concedes it "did not squarely raise this argument be-

low." DOL Reply. Br. at 19. Indeed, not only did the

government not make this argument, it argued that "[t]he

fact that [NAM's counsel] allegedly agreed to handle this

matter pro bono does not affect the analysis." App. 18 (DOL

Opp. at 12) (emphasis added).11 Because the government

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11 The government made this statement in the course of arguing

what might be described as the "inverse" of its current contention:

the fact that NAM was represented pro bono should not, DOL

contended, "automatically entitle a trade association to fees when it

cites no exceptional circumstances to justify its failure to raise

the pro bono argument before the district court, we decline to

address it for the first time on appeal. See Kattan, 995 F.2d

at 278.

IV

For the reasons stated, we affirm the decision of the

district court awarding attorneys' fees and other expenses to

the plaintiff. NAM also requests an award of fees and

expenses for this appeal under the same provisions of the

EAJA. As the United States has not objected, we grant the

request and remand this matter to the district court for a

determination of reasonable attorneys' fees and expenses

incurred on appeal. See Love, 924 F.2d at 1497; see also

Commissioner v. Jean, 496 U.S. 154, 159-60 (1990).

___________

would otherwise be ineligible because of its members resources and

size." App. 19 (DOL Opp. at 13).