Rice Services, Ltd. v. United States

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United States Court of Appeals for the Federal Circuit

04-5069

RICE SERVICES, LTD.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant.

Keith L. Baker, Barton, Baker, McMahon, Hildebrant & Tolle, LLP, of McLean,

Virginia, argued for plaintiff-appellee. With him on the brief was William T. Welch.

Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil

Division, United States Department of Justice, of Washington, DC, argued for

defendant-appellant. With him on the brief were Peter D. Keisler, Assistant Attorney

General, David M. Cohen, Director, and Franklin E. White, Jr., Assistant Director. Of

counsel was Paul W. Knoth, Attorney, Office of the General Counsel, United States

Department of the Navy, of Washington, DC.

Appealed from: United States Court of Federal Claims

Senior Judge James F. Merow

United States Court of Appeals for the Federal Circuit

04-5069

RICE SERVICES, LTD.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant.

__________________________

DECIDED: April 27, 2005

__________________________

Before SCHALL, DYK, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge SCHALL. Concurring opinion filed by Circuit

Judge DYK.

SCHALL, Circuit Judge.

This is an appeal of a judgment awarding attorney’s fees under the Equal Access

to Justice Act (“EAJA”), 28 U.S.C. § 2412.1 The case stems from a bid-protest action

brought by Rice Services, Ltd. (“Rice”) against the Department of the Navy (“Navy”)

challenging the award of a contract for dining services. Rice filed the bid-protest action

in the Court of Federal Claims on May 9, 2002, asking for, among other things, a

reevaluation of the bids pursuant to the terms of the solicitation. The parties filed cross-

motions for summary judgment on the administrative record. In addition, the

1

Unless otherwise indicated, references are to the 2000 version of the

United States Code.

government filed a motion to dismiss the case for mootness due to the Navy’s voluntary

and unilateral decision to reevaluate the bids. The Court of Federal Claims granted the

government’s motion to dismiss and consequently denied the two pending motions for

judgment on the administrative record. Rice Servs., Ltd. v. United States, No. 02-468 C

(Fed. Cl. Sept. 26, 2002) (“Dismissal Order”).

Subsequently, having received the relief requested in its complaint, Rice filed an

application for attorney’s fees under the EAJA. The Court of Federal Claims granted

Rice’s application and awarded Rice $31,709.38 in attorney’s fees. Rice Servs., Ltd. v.

United States, No. 02-468 C (Fed. Cl. July 29, 2003) (“EAJA Order”). After the court

denied the government’s motion for reconsideration of the award, Rice Servs., Ltd. v.

United States, 59 Fed. Cl. 619 (2004) (“Reconsideration”), the government appealed.

The specific issue on appeal is whether the Court of Federal Claims erred in finding

Rice a “prevailing party” under the EAJA. Because we find the court did err, we

reverse.

BACKGROUND

I.

This case arises out of a procurement by the Navy for wardroom dining services

at the U.S. Naval Academy in Annapolis, Maryland. Dismissal Order, slip op. at 1. The

Navy awarded the dining services contract to EC Management Services of Maryland,

LLC (“EC”) in December of 2001. Id. The term of the contract was from January 1,

2002, through September 30, 2002, but under the contract, the Navy could award option

years upon sixty days prior notice. Id. On December 28, 2001, Rice filed an agency-

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level protest with the Navy contesting the award to EC. Id. The Navy denied Rice’s

protest on January 29, 2002.

On May 9, 2002, Rice filed this action in the Court of Federal Claims. Rice

requested the following relief: (1) a declaration that the award to EC was unlawful; (2)

an injunction ordering a new award pursuant to the terms of the solicitation; (3) an order

enjoining extension of the contract beyond its base period; and (4) an order enjoining

any new award to EC. (Compl. ¶ 1.) The administrative record was filed in the Court of

Federal Claims on June 10, 2002, and the parties cross-moved for summary judgment

on it shortly thereafter. Dismissal Order, slip op. at 2. In addition, the government filed

a motion to dismiss the lawsuit on the ground that the case was moot due to the Navy’s

unilateral and voluntary decision to conduct a new contract solicitation. Id.

On July 18, 2002, as promised in the government’s motion to dismiss, the Navy

issued notices to each of the six original offerors, informing them that the Navy had

decided to open discussions regarding the solicitation and asking each offeror if it was

interested in participating. Id. All six offerors indicated they were interested in the

proposal. Id. The Navy and offerors subsequently established a schedule for

discussions, submission of new offers, oral presentations, and a reevaluation. Id. The

schedule stated that a new award would be made by November 20, 2002. Id. In view

of the new solicitation, the Navy stated that it would not exercise the option under the

current contract with EC.2 Id.

2

The Navy did, however, reserve the right to exercise the contract’s

continuity of service clause in order to obtain necessary services pending

commencement of the new award in November. Dismissal Order, slip op. at 2.

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On September 26, 2002, the Court of Federal Claims granted the government’s

motion to dismiss and denied all other pending motions. Id. slip op. at 3. The court

found that the case had become “essentially moot” because

[t]he relief requested by [Rice] has, substantially, been

voluntarily afforded by the Navy. The original offerors,

including [Rice] are voluntarily participating in the new

submissions. The contract term awarded to [EC] expires on

September 30, 2002. No option year will be awarded. New

best and final offers for the wardroom dining service at issue

will be obtained and a new award decision will be made by

the Navy.

Id. slip op. at 2.3 The court concluded:

In this circumstance, . . . further action by the Court is not

required or justified . . . and it is ORDERED that:

(1) The remedial action described and promised in

defendant’s submissions shall be undertaken;

(2) Accordingly, all outstanding motions are,

otherwise, DENIED, without prejudice to any reassertion of

the arguments therein which may be made in any

subsequent protest action addressed to the remedial action

underway;

(3) Plaintiff’s complaint shall be DISMISSED,

without prejudice to the assertion of any new protest action

addressed to the remedial action in progress.

Id. slip op. at 3 (emphases in original).

3

A case is moot “when the issues presented are no longer ‘live’ or the

parties lack a legally cognizable interest in the outcome.” Powell v. McCormack, 395

U.S. 486, 496 (1969). The Supreme Court has stated a two-part test for determining

whether a case has been rendered moot. A case is rendered moot if (1) “it can be said

with assurance that there is no reasonable expectation that the alleged violation will

recur;” and (2) “interim relief or events have completely and irrevocably eradicated the

effects of the alleged violation.” County of Los Angeles v. Davis, 440 U.S. 625, 631

(1975) (citations omitted).

04-5069 4

II.

On December 17, 2002, Rice filed an application for attorney’s fees under the

EAJA. EAJA Order, slip op. at 2. The EAJA is a fee-shifting statute, which, under

appropriate circumstances, allows a party who prevails in litigation against the

government to recover attorney’s fees and litigation costs. 28 U.S.C. § 2412. The

statute states, in relevant part, 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 position of

the United States was substantially justified or that special circumstances make an

award unjust.” Id. § 2412(d)(1)(A).

The government opposed the fee application on the ground that Rice was not a

“prevailing party” under the Supreme Court’s decision in Buckhannon Board & Care

Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598

(2001), and this court’s decision in Brickwood Contractors, Inc. v. United States, 288

F.3d 1371 (Fed. Cir. 2002). EAJA Order, slip op. at 2. The government argued that

Rice did not qualify as a prevailing party under Buckhannon because the remedial

action taken by the Navy was not the result of a court order but, rather, the result of a

unilateral and voluntary decision by the Navy. Id. In response, Rice argued that it was

a prevailing party because the Dismissal Order of September 26, 2002, “affirmatively

ordered the Navy to act” in carrying-out its promised remedial action. Id.

The Court of Federal Claims granted Rice’s application and awarded Rice

$31,709.38 in attorney’s fees. Id. slip op. at 2-3. The court reasoned that the facts of

this case were equivalent to those of Former Employees of Motorola Ceramic Products

04-5069 5

v. United States, 336 F.3d 1360 (Fed. Cir. 2003), where this court held that a court

order remanding a case to an agency constitutes “success on the merits” when the

court did not retain jurisdiction on remand. EAJA Order, slip op. at 2 (“The

circumstances presented in this matter are equivalent to the situation where the parties

consent to a remand order for agency corrective action and where the court does not

retain jurisdiction while the further agency action is undertaken.”) Therefore, the court

held, Rice was a prevailing party and entitled to the claimed attorney’s fees.

The government subsequently filed a motion for reconsideration of the attorney’s

fee award. The government again argued that Rice did not “prevail” in its lawsuit

because the trial court only dismissed the claim after the Navy had undertaken

voluntary remedial action to reopen the solicitation. Reconsideration, 59 Fed. Cl. at

620. Therefore, according to the government, it was not a court order but the Navy’s

voluntary actions that gave Rice its requested relief. The government also argued that

this court’s decision in Brickwood, 288 F.3d at 1380, held that under Buckhannon the

only types of court action that confer prevailing party status are enforceable judgments

on the merits and court-ordered consent decrees, neither of which were present in this

case. Reconsideration, 59 Fed. Cl. at 621.

The Court of Federal Claims denied the motion for reconsideration on January

13, 2004. The court recognized that Buckhannon rejected the “catalyst theory” for fee

awards based on a voluntary change in a defendant’s conduct. Id. Rather, in order to

be a “prevailing party” after Buckhannon, the court stated, one must “receive at least

some relief on the merits,” which “alters the legal relationship of the parties.” Id.

(quoting Buckhannon, 532 U.S. at 603). Contrary to the government’s contention,

04-5069 6

however, the court held that Federal Circuit precedent did not limit “prevailing party”

status under Buckhannon to merit-based decisions or court-ordered consent decrees.

Id. The court indicated that the key question after Buckhannon is whether there was a

court order carrying sufficient judicial imprimatur to materially alter the legal relationship

of the parties. See id. at 622.

In this case, the Court of Federal Claims held that the Dismissal Order “not only

impressed defendant’s curative efforts with the imprimatur of this court, but also altered

the legal relationship between the parties.” Id. This was because the “Order requiring

defendant to comply with its promised action created independent rights and

obligations.” Id. at 623. Furthermore, the court found that Rice did obtain “some relief

on the merits” from the Dismissal Order. This was because Rice’s complaint asked the

court to order a new evaluation and to enjoin the Navy from exercising the option under

the award to EC, and this was the relief Rice actually received from the Dismissal

Order. Id. The court also reiterated that “the [dismissal] action taken was equivalent to

a remand to the Navy for re-solicitation of the procurement,” which the court viewed as

“success on the merits” under this court’s decision in Former Employees of Motorola.

Id. at 624.

The government timely appealed the Court of Federal Claims’ decision to this

court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

I.

Although this court gives deference to a trial court’s decision to award attorney’s

fees and expenses under the EAJA, no deference is given to a trial court’s legal

04-5069 7

interpretations of the EAJA. Former Employees of Motorola, 336 F.3d at 1363;

Brickwood, 288 F.3d at 1376. The question of whether a party qualifies as a “prevailing

party” under the EAJA is a question of law. Former Employees of Motorola, 336 F.3d at

1363. We therefore review de novo the decision of the Court of Federal Claims in this

case.

On appeal, the government argues that Rice is not a prevailing party because the

reevaluation of the bids was the result of the Navy’s voluntary and unilateral decision to

take remedial action and not the result of a court-ordered change in the legal

relationship of the parties. Moreover, the government argues that the Supreme Court’s

decision in Buckhannon and this court’s decision in Brickwood limit “prevailing party”

status to parties who have obtained judicial relief on the merits or a court-ordered

consent decree, neither of which, the government contends, were obtained in this case.

First, the government argues that Rice did not achieve “success on the merits” because

the court only dismissed the case in view of the Navy’s voluntary remedial action. The

government argues that the order in paragraph one of the Dismissal Order did not have

any legal effect because the case was moot and the court consequently lacked

jurisdiction to enter the order. The government further argues that, even if the case was

not moot, the order did not require the Navy to do anything it was not already doing.

Second, the government argues that there was not a court-ordered consent decree

because the remedial action was taken unilaterally and was therefore not the result of

an agreement or settlement between the parties.

The government also argues that the Court of Federal Claims erred in relying on

Former Employees of Motorola. The government contends that this is because in

04-5069 8

Former Employees of Motorola the trial court specifically remanded the case to an

agency, whereas in this case the trial court simply dismissed the case. In addition, the

government argues that unlike Former Employees of Motorola, where the remand

decision itself constituted success on the merits, the Dismissal Order did not reach the

merits of the case. The government asserts that this distinction makes the case like

Brickwood, not Former Employees of Motorola.

In response, Rice first argues that, under Buckhannon, “prevailing party” is not

limited to parties who obtained a merit-based judgment or consent decree, but includes

any party who obtained a court order materially changing the legal relationship of the

parties. Rice argues that the Court of Federal Claims’ decision should be affirmed

because, unlike the dismissal order in Brickwood, the Dismissal Order of September 26,

2002, meets the test for prevailing party status. That is, according to Rice, the

Dismissal Order materially changed the legal relationship of the parties by specifically

ordering that “the remedial action described and promised in defendant’s submissions

shall be undertaken.” Rice contends that this differentiates this case from Brickwood,

because in Brickwood the trial judge did not ever issue an order. Rather, in that case

the government sought dismissal after the trial judge made adverse comments at a

hearing for a temporary restraining order. In addition, Rice states that the judge’s

comments in Brickwood were made early in the case before the judge reached the

merits. In this case, by contrast, Rice argues, the administrative record was much more

developed and the court’s order was therefore on the merits. Rice further argues that

the Dismissal Order was fully enforceable because the government had not completed

its promised remedial action.

04-5069 9

Rice lastly argues that the Court of Federal Claims’ decision is also consistent

with this court’s decision in Former Employees of Motorola. Rice states that Former

Employees of Motorola held that “[w]hen there is a remand to the agency which remand

grants relief on the merits sought by the plaintiff, and the trial court does not retain

jurisdiction, the securing of the remand order is itself success on the merits.” Rice

contends that the Court of Federal Claims’ Dismissal Order meets this standard

because (1) the order granted Rice its requested relief by “convert[ing] the

Government’s plan to take remedial action into a legally enforceable mandate;” and (2)

the Court of Federal Claims did not retain jurisdiction over the case.

II.

A.

In Buckhannon, the Supreme Court addressed the meaning of “prevailing party”

as used in the Fair Housing Amendments Act of 1998 (“FHAA”), 42 U.S.C. § 3601 et

seq., and the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101 et

seq.4 532 U.S. at 601. The case involved resolving a split among the circuits as to

whether a party could recover attorney’s fees as a “prevailing party” based on the

“catalyst theory” of recovery. Id. at 602. The “catalyst theory” allows a plaintiff to

recover attorney’s fees as a “prevailing party” if the plaintiff “achieves the desired result

because the lawsuit brought about a voluntary change in the defendant’s conduct.” Id.

4

The FHHA provides that “the court, in its discretion, may allow the

prevailing party . . . a reasonable attorney’s fee and costs.” 42 U.S.C. § 3613(c)(2).

The ADA similarly states that “the court . . . , in its discretion, may allow the prevailing

party . . . a reasonable attorney’s fee, including litigation expenses, and costs.” Id.

§ 12205.

04-5069 10

at 601. The Supreme Court ultimately rejected this theory as a basis for recovery of

attorney’s fees under the fee-shifting provisions of the FHAA and ADA. Id. at 610.

The plaintiff in Buckhannon was an operator of assisted living homes who failed

an inspection by a West Virginia fire marshal because some of the plaintiff’s residents

were not capable of “self-preservation,” defined by the West Virginia Code to mean

residents capable of removing themselves “from situations involving imminent danger,

such as fire.” Id. at 600 (citation omitted). The plaintiff, on behalf of itself and other

similarly situated parties, brought suit in federal district court against the state of West

Virginia, two of the state’s agencies, and various individuals. Id. at 600-01. The

complaint sought injunctive relief and a declaration that the “self-preservation”

requirement violated provisions of the FHAA and ADA. Id. at 601. Before the district

court made a decision in the case, the West Virginia Legislature enacted two statutes

eliminating the “self-preservation” requirement. Id. Thereafter, the defendants filed a

motion to dismiss the case, which the district court granted. The court found that the

new legislation had eliminated the allegedly offensive provisions of the West Virginia

code. Id. The plaintiffs subsequently filed an application for attorney’s fees under the

FHAA and ADA, arguing entitlement to fees under the “catalyst theory.” The district

court and the Fourth Circuit rejected the “catalyst theory” as a basis for fees and denied

plaintiffs’ application. Id. at 602.

In affirming the Fourth Circuit, the Supreme Court rejected the “catalyst theory”

for fee awards. The Court first noted that under the “American Rule” there is “‘a general

practice of not awarding fees to a prevailing party absent explicit statutory authority.’”

Id. (quoting Key Tronic Corp. v. United States, 511 U.S. 809, 819 (1994)). Such explicit

04-5069 11

statutory authority, the Court explained, is found in numerous federal statutes allowing

an award of attorney’s fees to a “prevailing party.” Id. at 602-03 (listing various

statutes). However, the Court stated that a party cannot be said to “prevail” unless it

“‘receive[d] at least some relief on the merits of [its] claim.’” Id. at 603-04 (quoting

Hewitt v. Helms, 482 U.S. 755, 760 (1987)). Furthermore, the Court indicated that

“relief on the merits” at least required that the party obtain a court order materially

changing the legal relationship of the parties. See id. at 604-05. The Court specifically

held that “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.” Id. at 604 (quoting Tex. State Teachers Ass’n v. Garland

Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)). Accordingly, the Court held that the

“catalyst theory” could not serve as a basis for a fee award because “[i]t allows an

award where there is no judicially sanctioned change in the legal relationship of the

parties.” Id. at 605.

B.

This court expressly extended Buckhannon to the EAJA in Brickwood, 288 F.3d

at 1377-79. The case arose from a bid-protest action filed against the Department of

the Navy in the Court of Federal Claims on June 15, 1999. Id. at 1373. The plaintiff’s

complaint sought an injunction and an order directing the Navy to award the contract at

issue to the plaintiff. Id. At a hearing held on June 21, 1999, in connection with the

plaintiff’s request for a temporary restraining order (“TRO”), the court made several

comments that the Navy considered adverse to its position. Id. at 1373-74. As a result,

on July 16, 1999, the Navy filed a motion to dismiss the case, stating that “[a]fter further

04-5069 12

consideration of both the circumstances surrounding the solicitation and the governing

FAR provisions, and in light of the Court’s comments at the TRO hearing, the Navy has

cancelled the solicitation and plans to re-solicit using a new [Invitation for Bids].” Id. at

1374. The Court of Federal Claims granted the motion to dismiss and, subsequently,

granted the plaintiff’s application for attorney’s fees. Id. at 1374-75.

In reversing the trial court’s award of attorney’s fees, we stated: “In our view, the

Supreme Court in Buckhannon unambiguously rejected the ‘catalyst theory’ except in

instances where there is an enforceable judgment on the merits or a court-ordered

consent decree, both of which create a material alteration in the legal relationship of the

parties.” Id. at 1380. We further held that “the cited comments [from the TRO hearing]

are clearly not sufficient to establish a judicial imprimatur and they do not constitute a

‘court-ordered change in the legal relationship’ of the parties as Buckhannon requires.”

Id.

This court addressed the meaning of “prevailing party” again in Former

Employees of Motorola, 336 F.3d at 1363. The plaintiffs in that case filed a suit in the

Court of International Trade alleging that they were improperly denied Worker

Adjustment Assistance benefits by the Department of Labor. Id. at 1362. The plaintiffs

requested that either the court certify them for benefits or remand the case to the

Department of Labor for reconsideration. Id. The Department of Labor did not oppose

the request for remand but, rather, specifically requested remand for reconsideration.

Id. In light of the government’s position, the court ordered “that the defendant’s consent

motion is granted and the case is remanded to the Department of Labor for

reconsideration.” Id. The Department subsequently conducted a reevaluation and

04-5069 13

awarded plaintiffs their requested benefits. Shortly thereafter, the Court of International

Trade dismissed the case by consent of both parties. Id. at 1363. The plaintiffs then

filed an application for attorney’s fees under the EAJA, which the court denied based on

the Supreme Court’s holding in Buckhannon. Id.

On appeal, we determined that the Court of International Trade erred in not

finding the plaintiffs “prevailing parties” under the EAJA. We first stated that, in

Buckhannon,

[t]he [Supreme Court] explained that the term “prevailing

party” does not “authorize[ ] federal courts to award

attorney’s fees to a plaintiff who, by simply filing a

nonfrivolous but nonetheless potentially meritless lawsuit (it

will never be determined), has reached the ‘sought-after

destination’ without obtaining any judicial relief.” Rather, to

be a prevailing party, one must “receive at least some relief

on the merits,” which “alter[s] . . . the legal relationship of the

parties.” Two examples of an alteration in the legal

relationship between the parties were an enforceable

judgment on the merits and a court-ordered consent decree.

Id. at 1364 (citations omitted). Second, we recognized that although a remand order

generally does not confer prevailing party status, a remand to an administrative agency

is different. Id. at 1364-65. That is because a “court proceeding is treated as a

separate proceeding from the administrative proceeding.” Id. at 1365. A remand order

from a court proceeding may therefore “constitute the securing of relief on the merits.”

Id. We ultimately held that:

When there is a remand to the agency which remand grants

relief on the merits sought by the plaintiff, and the trial court

does not retain jurisdiction, the securing of the remand order

is itself success on the merits. When there is such a

remand, and the trial court retains jurisdiction, the claimant is

a prevailing party only if it succeeds before the agency.

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Id. at 1366. We concluded that the Court of International Trade erred because “the

Court of International Trade retained jurisdiction during the remand, and the remand

order resulted in appellants’ prevailing before the agency.” Id. at 1367. We noted,

however, that not all remand orders to an agency grant relief on the merits. Id. at 1366.

In Vaughn v. Principi, 336 F.3d 1351, 1355-57 (Fed. Cir. 2003), for example, we held

that neither the Secretary of Veterans Affairs’ filing of a motion to remand to allow

reconsideration in light of intervening legislation nor the Secretary’s motion to remand in

light of new evidence constituted relief on the merits.

C.

In sum, under our decisions in Brickwood, Former Employees of Motorola, and

Vaughn, in order to demonstrate that it is a “prevailing party,” an EAJA applicant must

show that it obtained an enforceable judgment on the merits or a court-ordered consent

decree that materially altered the legal relationship between the parties, or the

equivalent of either of those. This approach is consistent with the approach taken by

the majority of the circuits that have considered the issue. See, e.g., Roberson v.

Giuliani, 346 F.3d 75, 81 (2d Cir. 2003) (“We therefore join the majority of courts to have

considered the issue since Buckhannon in concluding that judicial action other than a

judgment on the merits or a consent decree can support an award of attorney’s fees, so

long as such action carries with it sufficient judicial imprimatur.” (footnote and citation

omitted)); Truesdell v. Philadelphia Hous. Auth., 290 F.3d 159, 165 (3d Cir. 2002)

(holding that an order characterized as a stipulated settlement conferred prevailing party

status because it used mandatory language, bore the judge’s signature, and was

judicially enforceable); Smyth v. Rivero, 282 F.3d 268, 281 (4th Cir. 2002) (“We doubt

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that the Supreme Court’s guidance in Buckhannon was intended to be interpreted so

restrictively as to require that the words ‘consent decree’ be used explicitly.”); T.D. v.

Lagrange Sch. Dist. No. 102, 349 F.3d 469, 478 (7th Cir. 2003) (“[S]ome settlement

agreements, even though not explicitly labeled as a ‘consent decree’ may confer

‘prevailing party’ status, if they are sufficiently analogous to a consent decree.”); Am.

Disability Ass’n, Inc. v. Chmielarz, 289 F.3d 1315, 1319 (11th Cir. 2002) (“[T]he

essential test established by [Buckhannon] requires the plaintiff to achieve a ‘judicially

sanctioned change in the legal relationship of the parties.’” (citation omitted)); Oil,

Chem. & Atomic Workers Int’l Union v. Dep’t of Energy, 288 F.3d 452, 458-59 (D.C. Cir.

2002) (implying that a stipulated order of dismissal could confer prevailing party status if

it carried sufficient judicial imprimatur to materially change the legal relationship of the

parties). But see Christina A. v. Bloomberg, 315 F.3d 990, 993 (8th Cir. 2003)

(“Buckhannon . . . makes it clear that a party prevails only if it receives either an

enforceable judgment on the merits or a consent decree.”).

In Roberson, for example, the Second Circuit held that a private settlement

agreement was sufficient to create prevailing party status because the district court’s

express retention of jurisdiction over the settlement provided sufficient “judicial

imprimatur” to materially change the legal relationships of the parties. 346 F.3d at 81.

Similarly, in American Disability Association, the Eleventh Circuit held that “[a] formal

consent decree is unnecessary in these circumstances because the explicit retention of

jurisdiction or the court’s order specifically approving the terms of the settlement are, for

these purposes, the functional equivalent of the entry of a consent decree.” 289 F.3d at

1320.

04-5069 16

III.

In Buckhannon, as discussed above, the Supreme Court rejected the “catalyst

theory” as a basis for establishing “prevailing party” status because “[the ‘catalyst

theory’] allows an award where there is no judicially sanctioned change in the legal

relationship of the parties.” 532 U.S. at 605. The Court explained that “[a] defendant’s

voluntary change in conduct, although perhaps accomplishing what the plaintiff sought

to achieve by the lawsuit, lacks the necessary judicial imprimatur,” id., to materially

change the legal relationship of the parties and, therefore, does not convey “prevailing

party” status, see id. at 604-06. In other words, Buckhannon has essentially created a

threshold that a plaintiff must meet in order to be deemed a “prevailing party.” This

threshold requires a plaintiff to have obtained a court order carrying sufficient “judicial

imprimatur” to materially change the legal relationship of the parties. Enforceable

judgments on the merits and court-ordered consent decrees clearly meet the threshold.

Id. at 604. The threshold can also be met by other court action “equivalent” to a

judgment on the merits or a court-ordered consent decree. However, court action is not

“equivalent” unless it carries sufficient judicial imprimatur to materially change the legal

relationship of the parties.

The precise question we must decide in this case is whether the Dismissal Order

of the Court of Federal Claims conferred prevailing party status upon Rice.5 The order

5

As noted above, the order stated:

In this circumstance, . . . further action by the Court is

not required or justified . . . and it is ORDERED that:

(1) The remedial action described and promised in

defendant’s submission shall be undertaken;

...

04-5069 17

was not an enforceable judgment on the merits because the court did not reach the

merits. Nor can we conclude that the order was a court-ordered consent decree, as

there is no evidence the order embodies an agreement between the parties. See

United States v. Armour & Co., 402 U.S. 673, 681-82 (1971) (“Consent decrees are

entered into by parties to a case after careful negotiation has produced an agreement

on their precise terms.”); Black’s Law Dictionary 441 (8th ed. 2004) (“A court decree that

all parties agree to.”). Therefore, in order for Rice to achieve “prevailing party” status

from the Dismissal Order, we must conclude that the order was the equivalent of a

judgment on the merits or a court-ordered consent decree. That is, we must conclude

that the order carried sufficient judicial imprimatur to materially alter the legal

relationship between Rice and the Navy. We conclude that the Dismissal Order did not

have such a legal effect.

This is principally because, in our view, Buckhannon does not allow a court to

take what would otherwise be a “catalyst theory” case and convert it—through language

like that used in paragraph one of the Dismissal Order—into a case where the plaintiff is

nevertheless accorded “prevailing party” status. Were we to hold otherwise, the Court’s

holding in Buckhannon could be easily circumvented by any order “directing” a party to

take action.

A review of the proceedings below establishes that Rice’s EAJA application is, in

essence, a “catalyst theory” claim for attorney’s fees. First, the facts before us show

(Cont’d. …)

(3) Plaintiff’s complaint shall be DISMISSED,

without prejudice to the assertion of any new protest

action addressed to the remedial action in progress.

Dismissal Order, slip op. at 3 (emphases in original).

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that the Navy acted unilaterally in initiating a reevaluation of bids. Indeed, the record

contains no evidence of any discussions between the parties prior to the Navy initiating

the reevaluation. Second, the record also indicates the Navy acted voluntarily, i.e. the

Navy undertook remedial action before any rulings by the Court of Federal Claims.

Moreover, it appears that all of the offerors, including Rice, responded favorably to the

Navy’s proposed remedial action before any rulings were made by the Court of Federal

Claims. Third, once the government informed the court of the remedial action

underway, the court issued the September 26, 2002 order dismissing the case without

reaching the merits. The court even stated that “[i]n view of the present status of this

procurement, it is concluded that plaintiff’s protest has become ‘essentially moot.’”

Dismissal Order, slip op. at 2 (emphasis added). That was because, the court said,

“[t]he relief requested by plaintiff ha[d], substantially, been voluntarily afforded by the

Navy[,]” and “[t]he original offerors, including plaintiff, [were] voluntarily participating in

the new submissions.” Id.

Under these circumstances, we cannot conclude that the order materially altered

the legal relationship between Rice and the Navy. Most notably, the court found that

Rice’s requested relief had already been “substantially” and “voluntarily” afforded by the

Navy. Thus, the court entered its order because the government had voluntarily

abandoned its position. The court did not state that it was entering the order as a merits

adjudication in the face of a continuing controversy. Therefore, even if the order

changed the legal relationship of the parties,6 the change was not material. In addition,

6

The court stated that the case was “essentially moot.” Obviously, if the

case was moot then the Dismissal Order had no effect on the parties’ legal relationship

and did not confer upon Rice “prevailing party” status. N. Carolina v. Rice, 404 U.S.

04-5069 19

the facts here present less of a case for attorney’s fees than those in Brickwood,

because in Brickwood, the government only took remedial action after the court made

preliminary comments from the bench regarding its view on the merits, comments that

were adverse to the government. Here, by contrast, the court had given no indication

as to its view on the merits of the case prior to the government seeking dismissal. Nor

is our holding in Former Employees of Motorola helpful to Rice. That is because the

Dismissal Order was not a remand to an agency for further consideration or action by

the government based on a settlement agreement, but a dismissal in view of remedial

action already implemented unilaterally and voluntarily by the Navy.

In sum, for the foregoing reasons, we conclude that this is really a “catalyst

theory” case, despite the Dismissal Order directing the government to follow through on

its promised remedial action. Holding otherwise would expose a backdoor through

which claimants could circumvent Buckhannon by obtaining attorney’s fees for what are,

in essence, “catalyst theory” cases.

CONCLUSION

We hold that Rice is not a “prevailing party” under the EAJA. The Court of

Federal Claims consequently erred in awarding Rice attorney’s fees. The judgment of

the court is therefore reversed.

COSTS

Each party shall bear its own costs.

REVERSED

(Cont’d. …)

244, 246 (1971) (“[I]t has frequently [been] repeated that federal courts are without

power to decide questions that cannot affect the rights of litigants in the case before

them.”).

04-5069 20

United States Court of Appeals for the Federal Circuit

04-5069

RICE SERVICES, LTD.,

Plaintiff-Appellee,

v.

UNITED STATES,

Defendant-Appellant.

DYK, Circuit Judge, concurring.

I join the majority opinion, and write separately only to emphasize that the

voluntary abandonment of challenged conduct will not always and automatically

preclude the award of attorney’s fees. As Buckhannon itself recognized, there may be

circumstances in which a continuing controversy will exist despite the claimed voluntary

abandonment; the merits of the case will be decided; and the winning party will be

entitled to prevailing party status. Thus in Buckhannon, the Court stated:

It is well settled that a defendant's voluntary cessation of a challenged

practice does not deprive a federal court of its power to determine the

legality of the practice unless it is absolutely clear that the allegedly

wrongful behavior could not reasonably be expected to recur. If a case is

not found to be moot, and the plaintiff later procures an enforceable

judgment, the court may of course award attorney's fees.

Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S.

598, 609 (2001) (internal citations omitted).

The majority here correctly concludes that this is not such a case. There was no

settlement agreement leading to the entry of an enforceable decree, and the Court of

Federal Claims entered an injunctive order without deciding the merits. Under such

circumstances, I agree that there is no entitlement to fees.

04-5069 2