Former Employees of BMC Software, Inc. v. United States Secretary of Labor

Slip Op. 07-150

UNITED STATES COURT OF INTERNATIONAL TRADE

_______________________________________

:

FORMER EMPLOYEES OF

BMC SOFTWARE, INC., :

Plaintiffs, :

Court No. 04-00229

v. :

UNITED STATES SECRETARY OF LABOR, :

_______________________________________:

Defendant.

[Granting in part Plaintiffs’ application for attorneys’ fees and expenses under the Equal Access to

Justice Act.]

Dated: October 15, 2007

Miller & Chevalier Chartered (Alexander D. Chinoy, Hal S. Shapiro, Kevin P. DiBartolo,

and James B. Altman), for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson, Director, and Patricia M.

McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of

Justice (Michael D. Panzera); Stephen R. Jones, Office of the Solicitor, U.S. Department of Labor,

Of Counsel; for Defendant.

OPINION

RIDGWAY, Judge:

In this action, former employees of Houston, Texas-based BMC Software, Inc. (“the

Workers”) successfully challenged the determination of the U.S. Department of Labor denying their

petition for certification of eligibility for trade adjustment assistance (“TAA”) benefits. See

generally Former Employees of BMC Software, Inc., 30 CIT ____, 454 F. Supp. 2d 1306 (2006)

(BMC); Notice of Revised Determination on Remand, 69 Fed. Reg. 76,783, 76,784 (Dec. 22, 2004).

Court No. 04-00229 Page 2

Now pending before the Court is Plaintiffs’ Application For Fees and Other Expenses

Pursuant to the Equal Access to Justice Act, which the Government opposes. See generally

Application For Fees and Other Expenses Pursuant to the Equal Access to Justice Act;

Memorandum in Support of Application for Attorneys’ Fees; and Accompanying Exhibits (“Pls.’

Application”); Defendant’s Response to Plaintiffs’ Application for Attorney Fees and Expenses

(“Def.’s Response”); Memorandum in Reply to Defendant’s Response to Plaintiffs’ Application for

Attorney Fees and Expenses (“Pls.’ Reply”).

For the reasons discussed more fully below, Plaintiffs’ Application For Fees and Other

Expenses is granted in part.

I. Background

The Workers’ former employer, BMC, is a “Fortune 1000” company, and one of the largest

software vendors in the world. Among other things, BMC designs, develops, produces and sells

business systems management software, which is distributed both in “object code” form and on a

“shrink-wrap” basis. BMC’s competitors include industry giants and household names such as IBM,

Computer Associates, Microsoft, Sun Microsystems, and Hewlett Packard. See BMC, 30 CIT at

____, 454 F. Supp. 2d at 1313.

The four former employees who filed the TAA petition at issue here were involved in the

production and distribution of BMC software products. Those products were mass-replicated at the

Houston facility where they worked (as well as at several other BMC facilities), and were often

shipped on physical media including CD-ROMs, packaged with user manuals. See BMC, 30 CIT

at ____, 454 F. Supp. 2d at 1313.

Court No. 04-00229 Page 3

The Workers’ employment at BMC was terminated in early August 2003, as part of a round

of lay-offs reported in an article published in the Houston Chronicle. The news article explained:

The company will spend $60 million this year to restructure. Jobs in sales, research

and development, information technology, and administration will be shed.

The company will offset some of the cuts by adding research and development jobs

and positions in information technology to offshore facilities in India and Israel,

making the net reduction more like 8 percent when all is done.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1313-14 (quotation omitted) (emphases added).

A copy of the Houston Chronicle article was enclosed with the petition for TAA benefits that

the Workers filed with the Labor Department in late December 2003. The petition alleged, inter

alia, that the company was shifting jobs “offshore to India and Israel.” Appended to the Workers’

petition were some 25 pages of announcements of job vacancies – primarily at BMC facilities in

India and Israel – printed out from the company’s website. See BMC, 30 CIT at ____, 454 F. Supp.

2d at 1314.

In mid-January 2004, the Labor Department contacted BMC management concerning the

Workers’ TAA petition. Asked to “[b]riefly describe the business activities of BMC Software, Inc.,”

the company’s Senior Manager for Human Resources responded by parroting – verbatim – a

marketing pitch on BMC’s website:

BMC Software, Inc. (NYSE: BMC), is a leading provider of enterprise management

software solutions that empower companies to manage their IT infrastructure from

a business perspective. Delivering Business Service Management, BMC Software

solutions span enterprise systems, applications, databases and service management.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1314-15 (citation and footnotes omitted).

The Labor Department also asked BMC to advise whether the company’s Houston

Court No. 04-00229 Page 4

employees “produce an article of any kind or . . . were engaged in employment related to the

production of an article.” There too the Senior Manager for Human Resources failed to respond

directly to the Labor Department’s inquiry, and instead proffered a “soundbite” plucked from the

company’s promotional materials (available on the company website):

BMC Software develops software solutions to proactively manage and monitor the

most complex IT environments, enabling around-the-clock availability of business-

critical applications. BMC also provides services to support its software products,

including support and implementation services.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315 (citation omitted).

With no further inquiry, the Labor Department denied the Workers’ TAA petition on January

20, 2004. The Labor Department ruled that the Workers “develop[ed] software solutions,” and thus

“[did] not produce an article” within the meaning of the TAA statute. See BMC, 30 CIT at ____,

454 F. Supp. 2d at 1315-16 (citations and footnotes omitted); see also 69 Fed. Reg. 11,887, 11,888

(March 12, 2004) (notice of denial of TAA petition) (ruling that “[t]he workers firm does not

produce an article as required for certification [under the TAA statute]”).1

According to an undated internal agency memorandum documenting the “Findings of the

1

The Negative Determination similarly concluded that the Workers were ineligible for

certification as service workers. According to that ruling:

Workers . . . may be certified [as service workers] only if their separation was caused

importantly by a reduced demand for their services from a parent firm, a firm

otherwise related to their firm by ownership, or a firm related by control.

Additionally, the reduction in demand for services must originate at a production

facility whose workers independently meet the statutory criteria for certification, and

the reduction must directly relate to the product impacted by imports. These

conditions have not been met for workers at this firm.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315-16 n.15 (citation omitted).

Court No. 04-00229 Page 5

Investigation,” the Labor Department concluded – solely on the strength of the information supplied

by BMC’s Senior Manager for Human Resources – that the Workers were “engaged in the

development of” software, and thus “provide[d] development services.” To support the agency’s

conclusion that “[BMC] [w]orkers do not produce an article,” the agency memorandum attributed

a statement to that effect to BMC’s Senior Manager for Human Resources. In fact, however, the

BMC official had not stated that the company does not produce a product. Indeed, the BMC

official’s statement expressly referred both to the company’s “products” and to its provision of

“services,” implicitly distinguishing between the two. The memorandum also stated that BMC’s

“Standard Industrial Classification” (“SIC”) code is 7371 (the code for “Computer Programming

Services”). As BMC noted, however, the source of that information was not specified, and the

relevance and accuracy of the information are dubious at best. See BMC, 30 CIT at ____, 454 F.

Supp. 2d at 1316 (citations omitted).2

The Labor Department sent the Workers copies of its Negative Determination under cover

of a standard form letter, which advised the Workers of their right to seek administrative

reconsideration of the denial. Incredibly, that letter said nothing about the Workers’ right to

challenge the Negative Determination in this court. See BMC, 30 CIT at ____, 454 F. Supp. 2d at

1316-17 (citations omitted).

The Workers timely sought reconsideration of the Labor Department’s denial of their TAA

petition. In their request for reconsideration, the Workers disputed the agency’s determination that

2

The Labor Department and other federal agencies historically have used the Standard

Industrial Classification (“SIC”) system to classify businesses by the industry in which they are

engaged, for statistical and other purposes. See generally BMC, 30 CIT at ____ n.18, 454 F. Supp.

2d at 1316 n.18.

Court No. 04-00229 Page 6

BMC did not produce an article. The Workers referred the agency to three specific URL locations

on BMC’s website, including “an online store for purchasing BMC products and product lines.”

The Workers also quoted the BMC website:

Now you’re ready to shop online with BMC Software. Browse through the store by

category or by the A-Z list below. If you know the name of your product, use the

Product Name Search field to locate your product quickly.

(Emphases added.) The Workers explained that “[t]he use of the term ‘solutions’ is misleading.

Usage of the term ‘solutions’ within the BMC Software, Inc. web page and other places is

synonymous with ‘product lines.’” And the Workers again stated that BMC was shifting work “to

overseas companies as well as newly created BMC locations overseas.” The Workers added that

software was also being “imported to make up the products and product lines that BMC Software,

Inc. produces.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317 (citations omitted).

In response to the Workers’ request for reconsideration, a Labor Department staffer called

BMC’s Senior Manager for Human Resources (the same company official who had responded to

the agency’s initial request for information). The BMC official reportedly stated unequivocally that

“no products are manufactured” by the company, and that the company’s software is not “recorded

on media disks,” nor is it “mass-produced” or “sold off-the-shelf.” She reportedly further stated that

“most [of BMC’s] software is customized for individual users,” and denied that jobs had been

transferred abroad. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317 (emphasis added) (citation

omitted).

The Labor Department staffer failed to ask any follow-up questions concerning, for example,

the nature and volume of BMC software that is not “customized for individual users” – i.e., software

Court No. 04-00229 Page 7

that is mass-produced. Similarly, the staffer failed to explore with the BMC official the allegations

of increased imports raised in the Workers’ request for reconsideration. Indeed, the agency staffer

did nothing to confront the BMC official with any of the information provided by the Workers. Nor

did the staffer contact any of the Workers (to verify the information provided by BMC), or take any

other measures to try to reconcile the apparent discrepancies and inconsistencies in the information

before the agency. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317.

Based solely on its phone conversation with BMC’s Senior Manager for Human Resources,

the Labor Department denied the Workers’ request for reconsideration. The Labor Department ruled

once again that the Workers were “not considered to have been engaged in production.”3 See BMC,

30 CIT at ____, 454 F. Supp. 2d at 1317-18 (citing 69 Fed. Reg. 20,642) (April 16, 2004) (notice

of denial of request for reconsideration).4

3

The Labor Department ’s notice denying the Workers’ request for reconsideration further

stated: “The petitioner also alleges that imports impacted layoffs, asserting that because workers lost

their jobs due to a transfer of job functions overseas, petitioning workers should be considered

import impacted.” See 69 Fed. Reg. at 20,642. As BMC noted, however, there are at least two

problems with that statement. See BMC, 30 CIT at ____ & n.20, 454 F. Supp. 2d at 1317-18 & n.20

(citations omitted).

First, the Labor Department investigator reviewing the request for reconsideration failed to

ask BMC about the Workers’ claims of increased imports. There is therefore nothing in the record

on the request for reconsideration to support an agency finding on the subject. And, second, the

quoted statement improperly conflates two separate bases for TAA certification – increased imports

versus a shift in production – and is simply illogical. See BMC, 30 CIT at ____ n.20, 454 F. Supp.

2d at 1317-18 n.20 (citations omitted).

4

As BMC observed, the Labor Department notice denying the request for consideration also

reiterated the agency’s prior ruling that the Workers could not be certified as “service workers” –

albeit based on a rather different rationale:

Only in very limited instances are service workers certified for TAA, namely the

worker separations must be caused by a reduced demand for their services from a

Court No. 04-00229 Page 8

The Labor Department’s notice denying the Workers’ request for reconsideration

summarized the agency’s rationale, emphasizing the concept of “tangibility”:

Software design and developing are not considered production of an article within

the meaning of [the TAA statute]. Petitioning workers do not produce an “article”

within the meaning of [that statute]. Formatted electronic software and codes are not

tangible commodities, that is, marketable products, and they are not listed on the

Harmonized Tariff Schedule of the United States (HTS), . . . which describes articles

imported to the United States.

To be listed in the HTS, an article would be subject to a duty on the tariff schedule

and have a value that makes it marketable, fungible and interchangeable for

commercial purposes. Although a wide variety of tangible products are described

as articles and characterized as dutiable in the HTS, informational products that

could historically be sent in letter form and that can currently be electronically

transmitted . . . are not listed in the HTS. Such products are not the type of products

that customs officials inspect and that the TAA program was generally designed to

address.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1318-21 (emphases added) (citations omitted).

This action ensued, commenced by the Workers’ letter to the court dated June 1, 2004

(deemed the Complaint in this matter, filed as of June 3, 2004). The attachments to the Workers’

letter included copies of photos of BMC software on physical media (such as CD-ROMs). See

Complaint.5

parent or controlling firm or subdivision whose workers produce an article and who

are currently under certification for TAA. The investigation revealed no such

affiliations.

(Emphasis added.) But, as BMC explained, the agency materially misstated the test for certification

as “service workers.” See generally BMC, 30 CIT at ____ n.21, 454 F. Supp. 2d at 1318 n.21

(citation omitted).

5

The Workers’ Application mistakenly states that the Workers submitted “photographic

evidence of shrink-wrapped BMC software on CDs” with their request for reconsideration. See Pls.’

Application at 4. As discussed above, the copies of photos instead were included with the

Complaint filed with the court.

Court No. 04-00229 Page 9

In lieu of filing an Answer, the Government requested a 60-day voluntary remand to allow

the Labor Department to conduct a further investigation and to make a redetermination as to the

Workers’ eligibility for TAA benefits. As grounds for the voluntary remand, the Government cited

the Labor Department’s “need[] to resolve an apparent conflict between information provided by

company officials and information provided by the petitioners” – specifically, whether BMC

produces “articles.” And, as counsel for the Government candidly conceded, the “conflict” between

information provided by the Workers and that provided by BMC was “apparent” during the course

of the Labor Department’s investigation – long before the Workers filed their Complaint with the

Court. See BMC, 30 CIT at ____ & n.24, 454 F. Supp. 2d at 1321 & n.24; Defendant’s Second

Amended Motion for Voluntary Remand, at 3 (citing, as grounds for remand, not only the photos

of software attached to the Workers’ Complaint, but also information that had been included in the

Workers’ request for reconsideration).

Counsel were appointed to represent the Workers, and played an integral role in structuring

the Court’s Remand Order. The Workers noted that the Labor Department had limited the scope of

both its initial investigation and its investigation following the Workers’ request for reconsideration

to only a single TAA criterion – whether the Workers had been engaged in the production of an

“article” within the meaning of the TAA statute. The Workers emphasized that they were concerned

about the impact of delayed certification by the Labor Department on the availability of full TAA

benefits, and that they wanted to guard against the need for multiple remands. The Workers

therefore conditioned their consent to the Government’s motion for a voluntary remand on the

agency’s conduct of a comprehensive remand investigation – an investigation in which the agency

Court No. 04-00229 Page 10

would reach determinations on all criteria for TAA certification. The Workers conferred with the

Government, and drafted a detailed order to that effect for the consideration of the Court. See

generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1344-45; Plaintiffs’ Response to Government’s

Second Amended Motion to Remand Case. The Remand Order that the Court entered reflected

only minor changes to the draft submitted by the Workers’ counsel. See Remand Order.

Three days before the Labor Department’s remand results were due to be filed, the

Government requested a 60-day extension of the deadline. When the Government contacted the

Workers’ counsel to request their consent to the extension of time, the Workers reiterated their

previously-expressed concerns about the effect of delayed certification on the availability of TAA

benefits, and conditioned their consent upon an assurance from the Government that – should the

former employees of BMC be certified – the date of their certification would have no effect on the

benefits available to them. Accordingly, the Government specifically warranted that, “in the event

[the petitioning workers] are certified in this case, [they] would be entitled to receive full [Trade

Readjustment Allowance, or ‘TRA’] benefits regardless of the date they are certified.” See

Defendant’s Consent Motion for an Extension of Time to File Remand Results, at 3-4. In reliance

on the Government’s assurances, the Workers consented to the requested extension of time, and the

Court granted it. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1345-46 (quoting Defendant’s

Consent Motion for an Extension of Time to File Remand Results, at 3-4).

On remand, the Labor Department reiterated – and elaborated on – its test for “production”

of an “article” in the context of the software industry, further emphasizing the characteristic of

“tangibility”:

Court No. 04-00229 Page 11

The Department has consistently maintained that the design and development of

software is a service. In order to be treated as an article, for TAA purposes, a

software product must be tangible, fungible, and widely marketed. The Department

considers software that is mass-replicated on physical media (such as CDs, tapes, or

diskettes) and widely marketed and commercially available (e.g., packaged “off-the-

shelf” programs) and dutiable under the Harmonized Tariff Schedule of the United

States to be an article. The workers designing and developing such products would

be considered to be engaged in services supporting the production of an article.

69 Fed. Reg. at 76,783 (emphasis added). Applying that analysis in the course of its remand

investigation here, the Labor Department “raised additional questions and obtained detailed

supplemental responses from [BMC].” Id.

The information that BMC provided to the Labor Department in the course of the remand

investigation conflicted with the information that the company had supplied earlier, and bore out the

Workers’ claims, casting an entirely new light on the merits of the Workers’ TAA petition.

Reiterating its position that “to be treated as an article . . . for TAA purposes, a software product

must be tangible,”6 the Labor Department explained:

[T]he new information showed that, in addition to software design and development,

the firm does, in fact, mass-replicate software at the subject facility. Further,

software produced by the firm at the subject facility includes not only custom

applications, but [also] packaged ‘off-the-shelf’ applications which are mass-

replicated on various media (CDs and tapes) at the subject facility.

69 Fed. Reg. at 76,783 (emphases added). Noting that BMC employees “are not separately

6

The Labor Department had advanced similar views – articulated in varying formulations –

in a number of cases filed with the court in recent years involving software and similar “intangible”

goods. Because BMC in fact sells its software “prepackaged” in “shrink wrap form” as well as

electronically (“in object code form”), the Workers in this case qualified for TAA certification even

under the criteria that the Labor Department was applying at the time. Accordingly, there was no

need to reach the substantive merits of those criteria in this case, except to note that the Workers

vigorously disputed them, and that the agency has since repudiated them in significant part. See

BMC, 30 CIT at ____ n.22, 454 F. Supp. 2d at 1319-20 n.22 (collecting software and other similar

cases).

Court No. 04-00229 Page 12

identifiable by product line,” the Labor Department concluded that the Workers here were, indeed,

“engage[d] in activity related to the production of an article.” Id.

On remand, the Labor Department also re-evaluated the Workers’ allegations that BMC had

shifted production overseas, to India and Israel. 69 Fed. Reg. at 76,783. The agency concluded that

“there was no shift in production, for TAA purposes.” Id. However, the agency did find that

“employment and production of packaged, mass-replicated software at the subject facility had

declined significantly from 2002 to 2003,” that “company imports of mass-replicated software

increased during the same period,” and that “the increase in company imports represented a

significant percentage of the decline in production at the subject facility during the relevant period.”

Id. The Labor Department therefore determined on remand “that increases of imports of articles like

or directly competitive with those produced at BMC Software, Inc., Houston, Texas, contributed

importantly to the total or partial separation of a significant number of workers and to the decline

in sales or production at that firm.” Id. at 76,783-84.

Accordingly, nearly one full year after the TAA petition was filed (and more than 16 months

after the Workers here lost their jobs), the Labor Department certified as eligible to apply for

benefits all Houston-based BMC employees “who became totally or partially separated from

employment on or after December 23, 2002, through two years from the issuance of [the] revised

determination.” 69 Fed. Reg. at 76,783-84.

In their comments on the Labor Department’s remand determination, the Workers advised

that they were “generally satisfied” with the outcome of the remand investigation. However, the

Workers expressed concern that the remand determination did not reflect the unconditional

Court No. 04-00229 Page 13

assurances that the Government had previously given them. The Workers therefore requested that

the Court “expressly order[ ], in accordance with Defendant’s representation, that Plaintiffs, having

been certified, are entitled to receive full TRA benefits, regardless of the date of their certification.”

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1346 (quoting Plaintiffs’ Comments on Defendant’s

Determination on Remand, at 1-2).

The Government responded flatly that the Court lacked jurisdiction to enforce the

representations that the Government’s counsel had made to the Court and to the Workers. See BMC,

30 CIT at ____, 454 F. Supp. 2d at 1346; Defendant’s Response to Plaintiffs’ Comments In

Response to Labor’s Remand Determination, at 3 (arguing that “although Labor confirms that the

delay from litigation will not affect the calculation of benefits . . . , the Court lacks the authority to

dictate whether the petitioners will, in fact, receive ‘full’ TRA benefits,” and characterizing as

“inappropriate” the Court’s inquiry into the effects, if any, of litigation delays on relief ultimately

available in a TAA case).

The Government’s insistence that the Court lacked any authority to hold counsel to the

Government (and the Government itself) to the representations that the Government had previously

made precipitated several rounds of post-certification submissions by the parties – all of which were

filed in direct response to orders of, or letters from, the Court.7

7

See Remand Order (Aug. 11, 2004); Plaintiffs’ Comments on Defendant’s Determination

on Remand; Defendant’s Response to Plaintiffs’ Comments in Response to Labor’s Remand

Determination; Letter to Defendant from the Court (Feb. 4, 2005); Defendant’s Memorandum of

Law in Response to the February 4, 2005 Order; Letter to Court from Plaintiffs (Feb. 11, 2005);

Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’ Comments on Remand Results; Letter to

Parties from Court (May 12, 2005); Defendant’s Memorandum of Law in Response to the May 12,

2005 Order; Letter to Court from Plaintiffs (May 19, 2005).

Court No. 04-00229 Page 14

In light of the Workers’ objections to the language of the Labor Department’s remand

determination and the Government’s intransigence, this action was maintained on the Court’s docket

following certification, to ensure that – in accordance with the assurances that the Government had

previously given the Court and the Workers, and on which they had relied – the Workers’ receipt

of the various types of TAA benefits to which they were entitled was indeed unaffected by the Labor

Department’s protracted delays in certification.

Following some initial setbacks, and armed with clarification elicited in the course of the

post-certification briefing, the Workers advised that they no longer foresaw any insurmountable

obstacles to their receipt of the full measure of TAA benefits. The Workers further advised that if

– contrary to their expectations – they did in fact continue to experience problems with their receipt

of benefits, they would promptly notify the Court. See generally Letter to Court from Plaintiffs

(May 19, 2005). “The Workers’ silence in the intervening months [between their counsel’s May

2005 letter and the issuance of BMC] suggests that any need for further proceedings to ‘hold the

Government to its words’ ha[d] been obviated.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1350.

The Labor Department has since revised its TAA certification criteria to recognize that – at

least for purposes of cases such as this – “there are tangible and intangible articles,” and that “the

production of intangible articles can be distinguished from the provision of services.” Accordingly,

“[s]oftware and similar intangible goods that would have been considered articles for the purposes

of the Trade Act if embodied in a physical medium will now be considered to be articles regardless

of their method of transfer.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1322-23 (quoting

Computer Sciences Corporation: Notice of Revised Determination on Remand, 71 Fed. Reg. 18,355

Court No. 04-00229 Page 15

(April 11, 2006) (emphasis added)). In short, as the Labor Department apparently now concedes,

the Workers here would have been entitled to TAA certification even if BMC’s software had not

been “replicated on various media (CDs and tapes)” – that is, even if it had not been in “tangible”

form. Id. (footnote omitted).

II. Analysis

Under the Equal Access to Justice Act (“EAJA”):

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 . . . , including proceedings for

judicial review of agency 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.

28 U.S.C. § 2412(d)(1)(A) (2000).8 Thus, although the court retains a measure of discretion as to

the size of the award, under the EAJA “a trial court must award attorney’s fees where: (i) the

claimant is a ‘prevailing party’; (ii) the government’s position was not substantially justified; (iii)

no ‘special circumstances make an award unjust’; and (iv) the fee application is timely submitted

and supported by an itemized statement.” Libas, Ltd. v. United States, 314 F.3d 1362, 1365 (Fed.

Cir. 2003) (citations omitted) (emphasis added) (also noting “the imperative language” of EAJA

statute); accord Hubbard v. United States, 480 F.3d 1327, 1331 (Fed. Cir. 2007) (acknowledging

“mandatory” nature of EAJA award); Brickwood Contractors, Inc. v. United States, 288 F.3d 1371,

1379 (Fed. Cir. 2002) (same).

8

Except as otherwise indicated, all statutory citations are to the 2000 edition of the United

States Code. However, the text of the referenced provisions remained the same at all times relevant

herein.

Court No. 04-00229 Page 16

Notably, the Government here does not dispute that the Workers were “prevailing parties.”9

Nor does the Government contend either that there are “special circumstances” that would render

an award unjust,10 or that the Workers’ application for fees and expenses was untimely. Instead,

the Government contends that an award is not warranted because the United States’ position was

“substantially justified,” both at the agency level and in litigation. See generally Def.’s Response

at 1-2, 8-9, 10-23. The Government further argues that – even if the Workers’ application for fees

and expenses is granted – the sum claimed is excessive. See generally Def.’s Response at 1-2, 9,

23-40.

As discussed in greater detail below, the Government’s position at the administrative level,

at a minimum, was not “substantially justified.” Moreover, contrary to the Government’s assertions,

the fees claimed are generally well within the bounds of reason, with a few relatively minor

exceptions.

A. Whether the Government’s Position Was “Substantially Justified”

The Government bears the burden of proving that its position was “substantially justified.”

9

See Pls.’ Reply at 1 n.1 (noting that “the government has implicitly conceded that Plaintiffs

qualify as ‘prevailing parties’ for purposes of EAJA”).

10

The EAJA’s “special circumstances” exception to an award of fees and expenses serves as

a “‘safety valve’ [which] helps to insure that the Government is not deterred from advancing in good

faith the novel but credible extensions and interpretations of the law that often underlie vigorous

enforcement efforts. It also gives the court discretion to deny awards where equitable considerations

dictate an award should not be made.” Devine v. U.S. Customs Service, 733 F.2d 892, 895-96 (Fed.

Cir. 1984) (quoting H.R. Rep. No. 1418, 96th Cong., 2d Sess. 11, reprinted in 1980 U.S.C.C.A.N.

4984, 4990). See, e.g., Taylor v. United States, 815 F.2d 249, 252 (3d Cir. 1987) (explaining that

“special circumstances” provision permits consideration of traditional equitable principles in

determining whether fee award is warranted); Oguachuba v. Immigration & Naturalization Service,

706 F.2d 93, 98 (2d Cir. 1983) (same).

Court No. 04-00229 Page 17

See, e.g., Libas, 314 F.3d at 1365 (citations omitted); Doty v. United States, 71 F.3d 384, 385 (Fed.

Cir. 1995) (citations omitted). The Government’s position is substantially justified if it is “justified

in substance or in the main – that is, justified to a degree that could satisfy a reasonable person.”

Pierce v. Underwood, 487 U.S. 552, 565 (1988). That a party other than the Government prevailed

in an action does not establish that the Government’s position was not substantially justified.

Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. United States, 837 F.2d 465, 467 (Fed.

Cir. 1988).

In determining whether substantial justification exists, a court is to weigh not only “the

position taken by the United States in the civil action, [but also] the action or failure to act by the

agency upon which the civil action is based,” taking into consideration the “totality of the

circumstances.” 28 U.S.C. § 2412(d)(2)(D); Kelly v. Nicholson, 463 F.3d 1349, 1355 (Fed. Cir.

2006); Doty, 71 F.3d at 385-86 (citations omitted); Chiu v. United States, 948 F.2d 711, 715 (Fed.

Cir. 1991) (“trial courts are instructed to look at the entirety of the government’s conduct and make

a judgment call” as to “the government’s overall position”); Essex Electro Eng’rs, Inc. v. United

States, 757 F.2d 247, 253 (Fed. Cir. 1985) (articulating “totality of the circumstances” standard).

Reaching a determination on substantial justification requires that a court reexamine the legal

and factual circumstances of a case through the EAJA “prism” – “a different perspective than that

used at any other stage of the proceeding.” Luciano Pisoni, 837 F.2d at 467; Libas, 314 F.3d at 1366

(quoting United States v. Hallmark Constr. Co., 200 F.3d 1076, 1080 (7th Cir. 2000)). Nevertheless,

“the court’s merits reasoning may be quite relevant to the resolution of the substantial justification

question.” F.J. Vollmer Co., Inc. v. Magaw, 102 F.3d 591, 595 (D.C. Cir. 1996). And strong

Court No. 04-00229 Page 18

language criticizing the Government’s position in an opinion discussing the merits of a key issue

is evidence in support of an award of fees. See Marcus v. Shalala, 17 F.3d 1033, 1038 (7th Cir. 1994)

(cited in Golembiewski v. Barnhart, 382 F.3d 721, 724 (7th Cir. 2004)). “[A] string of losses can be

indicative” as well. Pierce v. Underwood, 487 U.S. at 569.

Moreover, in evaluating the existence of substantial justification, a trial court is entitled to

take into consideration “insights not conveyed by the record, into such matters as whether particular

evidence was worthy of being relied upon, or whether critical facts could easily have been verified

by the Government.” Pierce v. Underwood, 487 U.S. at 560; see also Hensley v. Eckerhart, 461

U.S. 424, 437 (1983) (noting propriety of deference to trial court’s “superior understanding of the

litigation”) (quoted in Comm’r, Immigration & Naturalization Service v. Jean, 496 U.S. 154, 161

(1990)); Libas, 314 F.3d at 1366 n.1 (in determining substantial justification, trial court may

consider “not only the actual record,” but also “for example, any insights which [it] may have

gleaned from settlement conferences or other pretrial activities that are not conveyed by the actual

record”) (citing Pierce v. Underwood, 487 U.S. at 560).11

11

Accord Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1256, 1257 (10th Cir. 2005) (noting

that trial court enjoys “the benefit of a degree of familiarity with trial court proceedings [the

appellate court] cannot hope to match,” and that trial court has an “inherent advantage in passing

on a fee request given its familiarity with the proceedings below”); Interfaith Community

Organization, 426 F.3d at 718 (deferring to trial court’s “far greater understanding of the deadlines

it imposed and the complexity of the underlying litigation”); Lyden v. Howerton, 731 F. Supp. at

1553 (noting, in analysis of “substantial justification,” that “[o]ftentimes, as here, the published

record of the case does not reveal the full aura and nuances of the litigation. Although the court

finds that the public record justifies finding the government without substantial justification in both

law and fact, the history, procedure, and the historical context, specifically within this court’s

knowledge, buttresses this conclusion.”).

Court No. 04-00229 Page 19

1. The Role of the Labor Department in TAA Cases

The “substantial justification” analysis in this action cannot be conducted in a vacuum. The

justification for the Government’s position instead must be analyzed in the context of the trade

adjustment assistance (“TAA”) statute, and the special duties and obligations that the Labor

Department owes to workers in its administration of that statute. See generally BMC, 30 CIT at

____, 454 F. Supp. 2d at 1307-13 (summarizing policy underpinnings, legislative history, and

practical implications of TAA).

The TAA laws are remedial legislation,12 designed to assist workers who have lost their jobs

as a result of increased import competition from – or shifts in production to – other countries, by

helping those workers “learn the new skills necessary to find productive employment in a changing

American economy.” Former Employees of Chevron Prods. Co. v. U.S. Sec’y of Labor, 26 CIT

1272, 1273, 245 F. Supp. 2d 1312, 1317 (2002) (“Chevron I”) (quoting S. Rep. No. 100-71, at 11

(1987)).

Today’s TAA program entitles eligible workers to receive benefits which may include

employment services (such as career counseling, resume-writing and interview skills workshops,

12

See, e.g., Former Employees of Sonoco Prods. Co. v. Chao, 372 F.3d 1291, 1301 (Fed. Cir.

2004) (Mayer, C.J., dissenting) (noting “remedial” nature of TAA statute); UAW v. Marshall, 584

F.2d 390, 396 (D.C. Cir. 1978) (noting the “general remedial purpose” of TAA statute, and that

“remedial statutes are to be liberally construed” to effectuate their intended purpose); Fortin v.

Marshall, 608 F.2d 525, 526, 529 (1st Cir. 1979) (same); Usery v. Whitin Machine Works, Inc., 554

F.2d 498, 500, 502 (1st Cir. 1977) (emphasizing “remedial” purpose of TAA statute); Former

Employees of Merrill Corp. v. United States, 31 CIT ____, ____, 483 F. Supp. 2d 1256, 1266 (2007)

(explaining that “courts liberally construe the TAA provisions of the Trade Act to effectuate

legislative intent”); BMC, 30 CIT at ____ & n.9, 454 F. Supp. 2d at 1311 & n.9 (and authorities

cited there).

Court No. 04-00229 Page 20

and job referral programs), vocational training, job search and relocation allowances, income support

payments (known as “Trade Readjustment Allowance” or “TRA” payments), and a Health Insurance

Coverage Tax Credit. See generally 19 U.S.C. § 2272 et seq. (2000 & Supp. II 2002).

TAA historically has been viewed as the quid pro quo for U.S. national policies of free trade.

See generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1307-08 (and authorities cited there). As

UAW v. Marshall explains, “much as the doctrine of eminent domain requires compensation when

private property is taken for public use,” the trade adjustment assistance laws similarly reflect the

country’s recognition “that fairness demand[s] some mechanism whereby the national public, which

realizes an overall gain through trade readjustments, can compensate the particular . . . workers who

suffer a [job] loss.” UAW v. Marshall, 584 F.2d 390, 395 (D.C. Cir. 1978).

Absent TAA programs that are adequately funded and conscientiously administered,13 “the

costs of a federal policy [of free trade] that confer[s] benefits on the nation as a whole would be

imposed on a minority of American workers” who lose their jobs due to increased imports and shifts

of production abroad. Id. Indeed, in introducing TAA in 1962, President Kennedy justified the

program in moral terms:

13

BMC quoted a Wall Street Journal article which emphasized the importance of

conscientious implementation of the TAA program:

Calling attention to workers hurt by trade is uncomfortable for free traders. They

prefer to focus on benefits of low-cost imports and high-paying export jobs. But the

only way to persuade the public and politicians not to erect barriers to globalization

and trade is to equip young workers to compete and protect older workers who are

harmed. Creating programs with a few votes in Congress, and then botching the

execution, doesn’t help.

David Wessel, “Aid to Workers Hurt by Trade Comes in Trickle,” Wall Street Journal, Aug. 11,

2005, at A2 (emphasis added) (quoted in BMC, 30 CIT at ____ n.84, 454 F. Supp. 2d at 1355 n.84).

Court No. 04-00229 Page 21

Those injured by [trade] competition should not be required to bear the full brunt of

the impact. Rather, the burden of economic adjustment should be borne in part by

the federal government . . . [T]here is an obligation to render assistance to those who

suffer as a result of national trade policy.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1309 (citation omitted).

The TAA laws also have been compared to veterans’ benefits statutes:

The purpose of the [TAA statute] is to distribute benefits to American workers whose

jobs have been shipped overseas, while the purpose of the [veterans’ benefit laws]

. . . is to distribute benefits to veterans who have been injured during service. Both

are remedial acts designed to provide much needed aid.

Former Employees of Sonoco Prods. Co. v. Chao, 372 F.3d 1291, 1301 (Fed. Cir. 2004) (Mayer,

C.J., dissenting). The analogy is spot-on.

As BMC observed, “much as Congress has charged the U.S. Department of Veterans Affairs

. . . (‘VA’) with caring for those who have risked life and limb for our freedom, so too Congress has

entrusted to the Labor Department the responsibility for providing training and other re-employment

assistance to those who have paid for our place in the global economy with their jobs.” BMC, 30

CIT at ____, 454 F. Supp. 2d at 1355 (footnote omitted); compare, e.g., 38 U.S.C. § 5103A

(captioned “Duty to assist claimants,” obligating VA to “make reasonable efforts to assist a

claimant in obtaining evidence necessary to substantiate the claimant’s claim” for veterans’

benefits)14 with 29 C.F.R. § 90.12 (2003)15 (Labor Department is obligated to “marshal all relevant

14

See generally Karnas v. Derwinski, 1 Vet. App. 308, 313 (1991) (“duty-to-assist” and

“benefit-of-the-doubt” doctrines embodied in VA law “spring from a general desire to protect and

do justice to the veteran who has, often at great personal cost, served our country”), overruled on

other grounds, Kuzma v. Principi, 341 F.3d 1327, 1328-29 (Fed. Cir. 2003).

See also Littke v. Derwinski, 1 Vet. App. 90, 91-92 (1991) (characterizing “VA’s duty to

assist the veteran in developing the facts pertinent to his or her claim” as the “cornerstone of the

veterans’ claims process,” and emphasizing that “[t]he ‘duty to assist’ is neither optional nor

Court No. 04-00229 Page 22

facts” in making its TAA determinations).16

And just as veterans’ benefits programs are designed to be extraordinarily “veteran-friendly”

discretionary”); Godwin v. Derwinski, 1 Vet. App. 419, 425 (1991) (once veteran presents plausible

claim, burden shifts to VA to assist veteran in developing “all relevant facts, not just those for or

against the claim”); Murincsak v. Derwinski, 2 Vet. App. 363, 370 (1992) (same); 38 C.F.R. §

3.103(a) (VA Statement of Policy, which acknowledges: “Proceedings before VA are ex parte in

nature, and it is the obligation of VA to assist a claimant in developing the facts pertinent to the

claim and to render a decision which grants every benefit that can be supported in law while

protecting the interests of the Government.”).

As Littke correctly observes:

By assisting the claimant in developing pertinent facts, from whatever source, . . . the

VA will more adequately fulfill its statutory and regulatory duty to assist the veteran.

A well developed record will ensure that a fair, equitable and procedurally correct

decision on the veteran’s claim for benefits can be made.

Littke, 1 Vet. App. at 92. The same can be said of the Labor Department in TAA cases.

15

All citations to regulations are to the 2003 edition of the Code of Federal Regulations.

However, the text of the referenced provisions remained the same at all times relevant herein.

16

See also, e.g., Woodrum v. Donovan, 4 CIT 46, 55, 544 F. Supp. 202, 208-09 (1982) (“the

[TAA statute] requires the Secretary of Labor to conduct an investigation of each properly filed

petition”); Former Employees of IBM Corp., Global Services Division v. U.S. Sec’y of Labor, 29

CIT ____, ____, 387 F. Supp. 2d 1346, 1351 (2005) (rejecting Labor Department’s argument that

because the workers did not allege certain facts, agency was not obligated to make further inquiry,

and holding that – to the contrary – “it is incumbent upon Labor to take the lead in pursuing the

relevant facts”) (emphasis added); Former Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of

Labor, 17 CIT 126, 129, 814 F. Supp. 1111, 1114 (1993) (Labor Department “has an affirmative

duty to investigate” whether petitioning workers are eligible for TAA benefits) (citations omitted)

(emphasis added); Former Employees of Sun Apparel of Texas v. U.S. Sec’y of Labor, 28 CIT 1389,

1399 (2004) (“Labor is under a mandatory duty to ‘conduct an investigation into each properly filed

petition’”) (citation omitted) (emphasis added); Former Employees of Ameriphone, Inc. v. United

States, 27 CIT 1161, 1167, 288 F. Supp. 2d 1353, 1359 (2003) (Labor Department “has an

affirmative obligation to conduct its own independent ‘factual inquiry into the nature of the work

performed by the petitioners’”); Chevron I, 26 CIT at 1284-85, 245 F. Supp. 2d at 1327-28 (same).

Court No. 04-00229 Page 23

and “pro-claimant,”17 so too Congress designed TAA as a remedial program, recognizing that

petitioning workers would be (by definition) traumatized by the loss of their livelihood; that some

might not be highly-educated; that virtually all would be pro se; that none would have any mastery

of the complex statutory and regulatory scheme; and that the agency’s process would be largely ex

parte. Congress certainly did not intend the TAA petition process to be adversarial. Nor did

Congress intend to cast the Labor Department as a “defender of the fund,”18 sitting passively in

judgment, ruling “thumbs up” or “thumbs down” on whatever evidence the pro se petitioning

workers might manage to present. Cf. Former Employees of IBM Corp., Global Services Division

v. U.S. Sec’y of Labor, 29 CIT ____, ____, 387 F. Supp. 2d 1346, 1351 (2005) (emphasizing that

petitioning workers cannot reasonably be expected to have knowledge of the “sometimes esoteric

criteria” for TAA certification).19

17

See Hodge v. West, 155 F.3d 1356, 1362-63 (Fed. Cir. 1998) (emphasizing that the courts

“have long recognized that the character of the veterans’ benefit statutes is strongly and uniquely

pro-claimant”; noting that “Congress itself has recognized and preserved the unique character and

structure of the veterans’ benefits system,” and highlighting legislative history reflecting

Congressional intent to maintain “historically non-adversarial system of awarding benefits to

veterans”); Kelly v. Nicholson, 463 F.3d at 1353 (referring to veterans’ benefits system as “uniquely

pro-claimant”).

18

Compare 38 C.F.R. § 3.103(a) (“it is the obligation of VA . . . to render a decision which

grants every benefit that can be supported in law while protecting the interests of the Government”)

(emphasis added); Barrett v. Nicholson, 466 F.3d 1038, 1044 (Fed. Cir. 2006) (emphasizing that

“[t]he government’s interest in veterans cases is not that it shall win, but rather that justice shall be

done, that all veterans so entitled receive the benefits due to them”) (citation omitted).

19

See also Lady Kelly, Inc. v. U.S. Sec’y of Agriculture, 30 CIT ____, ____, 427 F. Supp.

2d 1171, 1175 (2006) (noting that, in authorizing TAA programs, “Congress has erected an

administrative regime to disburse benefits to a class of sympathetic plaintiffs with relatively little

sophistication in matters of federal litigation”); Lady Kelly, Inc. v. U.S. Sec’y of Agriculture, 30 CIT

____, ____, 414 F. Supp. 2d 1298, 1300 (2006) (observing “the lack of legal sophistication of many

TAA plaintiffs”).

Court No. 04-00229 Page 24

Quite to the contrary, the Labor Department is charged with an affirmative obligation to

proactively and thoroughly investigate all TAA claims filed with the agency – and, in the words of

the agency’s own regulations, to “marshal all relevant facts” before making its determinations. See

29 C.F.R. § 90.12. Moreover, both “[b]ecause of the ex parte nature of the certification process, and

the remedial purpose of the [TAA] program,” the agency is obligated to “conduct [its] investigation

with the utmost regard for the interest of the petitioning workers.” Internat’l Molders and Allied

Workers’ Union v. Marshall, 643 F.2d 26, 31 (D.C. Cir. 1981) (emphasis added); see also Stidham

v. U.S. Dep’t of Labor, 11 CIT 548, 551, 669 F. Supp. 432, 435 (1987) (citing Abbott v. Donovan,

7 CIT 323, 327-28, 588 F. Supp. 1438, 1442 (1984) (quotations omitted)); Former Employees of

Internat’l Business Machines Corp. v. U.S. Sec’y of Labor, 29 CIT ____, ____, 403 F. Supp. 2d

1311, 1314 (2005) (quoting Stidham); Former Employees of Computer Sciences Corp. v. U.S. Sec’y

of Labor, 29 CIT ____, ____, 366 F. Supp. 2d 1365, 1371 (2005).

Thus, while the Labor Department is vested with considerable discretion in the conduct of

its investigation of trade adjustment assistance claims, “there exists a threshold requirement of

reasonable inquiry.” Hawkins Oil & Gas, 17 CIT 126, 130, 814 F. Supp. 1111, 1115 (1993); Former

Employees of Electronic Data Sys. Corp. v. U.S. Sec’y of Labor, 29 CIT ____, ____, 408 F. Supp.

2d 1338, 1342-43 (2005); Former Employees of Merrill Corp. v. United States, 31 CIT ____, ____,

483 F. Supp. 2d 1256, 1264 (2007).

Compare Akles v. Derwinski, 1 Vet. App. 118, 121 (1991) (rejecting as absurd and

inconsistent with agency’s “duty to assist” the VA’s argument that a claimant should be obligated

to “specify with precision the statutory provisions or the corresponding regulations under which he

is seeking benefits”; contrary to agency’s contention, claimants should not be required “to develop

expertise in laws and regulations on veterans benefits before receiving any compensation”)

(emphasis added).

Court No. 04-00229 Page 25

To be sure, the statute does not entitle every petitioning worker to be certified as eligible to

apply for TAA benefits.20 But every worker is entitled to a thorough agency investigation of his or

her claim – an investigation in which the agency “marshal[s] all relevant facts,” and an investigation

which the agency conducts with “the utmost regard” for the petitioning workers’ interests. See, e.g.,

Former Employees of Ameriphone, Inc. v. United States, 27 CIT 1611, 1618, 288 F. Supp. 2d 1353,

1359-60 (2003); 29 C.F.R. § 90.12.21 The courts therefore have not hesitated to set aside agency

determinations that were the product of perfunctory investigations. See generally BMC, 30 CIT at

____ & n.10, ____, 454 F. Supp. 2d at 1312-13 & n.10 (cataloguing sampling of opinions criticizing

Labor Department’s handling of TAA cases); see also id., 30 CIT at ____, 454 F. Supp. 2d at 1352-

54 (summarizing statistics concerning TAA actions filed with Court of International Trade in recent

years, and noting that – at least during the four year period analyzed – Labor Department never

successfully defended a denial of a TAA petition without at least one remand).

2. The Government’s Position at the Administrative Level

The Government argues that the Labor Department’s position at the administrative level was

substantially justified because the agency “gathered information from petitioners as well as

20

See generally United Glass & Ceramic Workers v. Marshall, 584 F.2d 398, 400 (D.C. Cir.

1978) (quoting legislative history explaining that job losses are not covered by TAA if they “would

have occurred regardless of the level of imports, e.g., those resulting from domestic competition,

seasonal, cyclical, or technological factors”).

21

Cf. UAW v. Marshall, 584 F.2d at 397-98 (remanding case to Labor Department,

emphasizing that “[e]ven if a more detailed inquiry does not change the result in this case, the class

of those seeking or considering adjustment assistance will be afforded (1) a description of the

circumstances that the [agency] believes mandate the choice of the plant as the appropriate

subdivision and (2) an explanation why [the agency] holds that opinion.”).

Court No. 04-00229 Page 26

statements by company officials.” Def.’s Response at 15. According to the Government, the agency

“examined the evidence before it and chose between two conflicting interpretations.” Def.’s

Response at 15. The Government therefore concludes that the Labor Department properly

“examined the evidence before it, applied what it considered to be the appropriate legal standard,

and provided an analysis based on the facts and the law as it understood them.” Def.’s Response

at 15; see also id. at 8 (same). But see Pls.’ Application at 19-21 (highlighting flaws in agency’s

investigation, and noting that legal action would have been avoided “if [the Workers’] claims were

adequately investigated at the outset”); Pls.’ Reply at 1-7 (responding to Government’s arguments,

and rebutting Government’s attempt to distinguish “substantial justification” cases cited in Workers’

Application).

The Government’s portrayal of the Labor Department’s actions in this case bears little

semblance to reality. The Government’s assertion that the Labor Department “gathered information

from petitioners” shades the truth, to say the least. See Def.’s Response at 15 (emphasis added).

Although the agency received information from the Workers (both with the initial submission of

their TAA petition, and with their request for reconsideration), the agency failed to contact the

Workers for any purpose – except to notify them, by letter, of the denial of their TAA petition and

their request for reconsideration – until after this matter had been remanded to the agency by the

Court.

Similarly baseless is the Government’s claim that “[i]n its initial investigation, Labor

received information from BMC unequivocally indicating that the workers . . . provided a service

. . . and did not produce an article.” See Def.’s Response at 15 (emphasis added); see also id. at 8

Court No. 04-00229 Page 27

(noting that agency’s denial of Worker’s TAA application was “based . . . upon the representations

of . . . BMC officials”). To the contrary, there was nothing whatsoever about BMC’s response to

the agency’s initial inquiry that could be characterized as “unequivocal.”

As BMC explained, the information that BMC supplied in the course of the Labor

Department’s initial investigation could most charitably be described as vague or noncommital:

The Labor Department . . . asked BMC to advise whether the company’s Houston

employees “produce an article of any kind or . . . were engaged in employment

related to the production of an article.” . . . [BMC’s] Senior Manager for Human

Resources failed to respond directly to the Labor Department’s inquiry, and instead

proffered a “soundbite” plucked from the company’s promotional materials:

BMC Software develops software solutions to proactively manage

and monitor the most complex IT environments, enabling round-the-

clock availability of business-critical applications. BMC provides

services to support its software products, including support and

implementation services.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315 (emphasis added).22

22

Even if BMC had given an unequivocally affirmative response to the agency’s inquiry

(stating that the Workers did not produce an article), and even if the record had contained no

contrary evidence, the Labor Department nevertheless would not have been entitled to base a denial

of the Workers’ TAA petition on the information supplied by the company, because the agency’s

question was itself defective.

As BMC noted, “[i]n its initial investigation of the Workers’ petition, the Labor Department

asked BMC the ‘ultimate question’: ‘Do the workers in BMC Software, Inc., Houston, TX . . .

produce an article of any kind or were they engaged in employment related to the production of an

article? If workers do produce an article, please explain, and what is the product?’” BMC, 30 CIT

at ____, 454 F. Supp. 2d at 1328. But, as BMC observed, a long line of precedent has consistently

held that the Labor Department may not – in effect – delegate to employers the agency’s authority

to determine whether workers are entitled to TAA benefits. Accordingly, the Labor Department

cannot rely on employers’ blanket assurances that petitioning workers were, or were not, engaged

in “production” of an “article.” See generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1328-29

(and cases cited there).

In the case at bar, it was unreasonable for the Labor Department to leave it to a BMC official

Court No. 04-00229 Page 28

As BMC emphasized, the company’s response to the Labor Department’s question “cannot

fairly be read as a statement that BMC does not produce a product.” BMC, 30 CIT at ____ & n.17,

454 F. Supp. 2d at 1316 & n.17; see also id., 30 CIT at ____, 454 F. Supp. 2d at 1325-26 (same).

BMC pointedly observed: “It would be, frankly, impossible for anyone – including the Labor

Department – to discern from BMC’s non-responsive answers [to the agency’s questions] whether

or not the company’s software constitutes a ‘product’ within the Labor Department’s interpretation

of the TAA laws at that time.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1325 (emphasis added).

In sum, as BMC noted, “[t]he entirety of the Labor Department’s initial investigation here

consisted of a mere five questions (all of which were either very basic, or conclusory, or both),

posed to BMC’s Senior Manager for Human Resources. . . . The record reveals that the agency made

no effort whatsoever to follow up with company officials (via telephone or otherwise) – even though

the company’s responses to the Labor Department’s few substantive questions were non-responsive,

ambiguous, and/or inconsistent with other information on the record, and thus begged for

to determine what constitutes “production” of an “article” for TAA purposes in the context of the

software industry. Instead, the agency was obligated to frame specific questions in terms of the

criteria that the agency was assertedly applying at the time in cases such as this – i.e., whether the

company’s software was mass-replicated on physical media (such as CDs, tapes, or diskettes) and

whether it was widely marketed and commercially available (e.g., packaged for “off-the-shelf” sale)

– to elicit from the company factual information which the agency could then use to determine

whether the Workers were engaged in “production” of an “article.” See generally BMC, 30 CIT at

____ n.30, ____ n.36, 454 F. Supp. 2d at 1324 n.30, 1328 n.36 (and authority cited there).

The Labor Department’s criteria for certification in the software industry were not set forth

in any statute, regulation, or agency policy statement. Only upon issuance of the agency’s

determination denying their request for reconsideration did the Workers learn that the agency’s

criteria for TAA certification required that an “article” be “tangible,” and that the agency interpreted

the TAA statute to exclude software that is “electronically transmitted.” See BMC, 30 CIT at ____,

454 F. Supp. 2d at 1317-21 (citation omitted).

Court No. 04-00229 Page 29

clarification.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1324-25 (emphasis added). The Labor

Department compounded its error by misrepresenting and distorting the BMC official’s statements

in the agency’s determination denying the Workers’ TAA petition. See BMC, 30 CIT at ____ &

n.31, 454 F. Supp. 2d at 1325-26 & n.31.

As detailed above, then, there is simply no truth to the Government’s assertion that the Labor

Department’s initial determination that the Workers were not engaged in the “production” of an

“article” was based on an “unequivocal” statement by their former employer. That argument thus

cannot support a finding that the agency’s position at the administrative level was substantially

justified. Also unavailing is the Government’s assertion that the agency properly “examined the

evidence before it and chose between two conflicting interpretations” in denying the Workers’ TAA

petition. See Def.’s Response at 15.

The Government emphasizes that, in their request for reconsideration, the Workers “provided

additional information which called into question the representations by BMC officials,” and that

the Labor Department responded by requesting additional information from the company. See

Def.’s Response at 15. The Government argues that, “[e]ven assuming the [Labor Department]

could have resolved the discrepancy [between the information supplied by the Workers and that

supplied by BMC] by investigating further within the statutory timeframe, Labor decided to make

a credibility determination on the record evidence available. This was well within Labor’s

discretion.” Def.’s Response at 19; see also id. at 8, 19 (arguing that “Labor has the discretion to

determine the scope of its investigation”).23 The Government asserts flatly that “[t]here is no support

23

The Government intimates that the Labor Department’s investigatory efforts in this case

were constrained by “the statutory timeframe,” and seeks to make much of the fact that “[n]either

Court No. 04-00229 Page 30

the statute nor the regulations provide for any extension of the timeframe for issuing a

determination” on a TAA petition. See Def.’s Response at 19.

But the administrative record wholly undermines any suggestion that the Labor Department’s

investigation here was “a race against the clock.” As BMC pointed out, “[t]he entirety of the Labor

Department’s initial investigation . . . consisted of a mere five questions (all of which were either

very basic, or conclusory, or both), posed to BMC’s Senior Manager for Human Resources. . . . The

record reveals that the agency made no effort whatsoever to follow up with company officials (via

telephone or otherwise) – even though the company’s responses to the Labor Department’s few

substantive questions were non-responsive, ambiguous, and/or inconsistent with other information

on the record, and thus begged for clarification.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1324-25

(citation omitted); see also BMC, 30 CIT at ____ n.30, 454 F. Supp. 2d at 1324 n.30 (quoting,

verbatim, the five questions that the agency posed to BMC in its initial investigation).

The Government simply cannot credibly claim that the Labor Department’s “shockingly

cursory process” in this case consumed any significant part of the 40-day period that the statute

provides for the investigation of a TAA petition. See BMC, 30 CIT at ____, 454 F. Supp. 2d at

1324; 19 U.S.C. § 2273 (Supp. II 2002) (establishing 40-day time limit for initial TAA

determination). Indeed, it is a misnomer even to refer to the agency’s process here as an

“investigation.” As BMC observed, “[a]n ‘investigation’ is defined as a ‘detailed examination’ or

‘a searching inquiry,’ ‘an official probe.’” BMC, 30 CIT at ____ n.29, 454 F. Supp. 2d at 1324 n.29

(quoting Webster’s Third New International Dictionary (Unabridged) 1189 (2002)). To put it

bluntly, to characterize the Labor Department’s five-question inquiry in this case as an

“investigation” is to pervert the meaning of that term. See generally BMC, 30 CIT at ____ nn.29-30,

454 F. Supp. 2d at 1324 nn.29-30 (explaining, inter alia, that “[t]he Labor Department’s track record

in TAA cases in this court belies any suggestion that the agency’s typical initial review of a TAA

petition can fairly be described as an ‘investigation.’”).

Moreover, although the Labor Department is required by statute to reach an initial

determination on a TAA petition within 40 days, there is no statutory time limit for agency

determinations on requests for reconsideration. Nevertheless, as BMC noted, “the [Labor

Department’s] investigation conducted in response to the Workers’ request for reconsideration was

little more than a rubber stamp of its initial denial. The Labor Department’s reconsideration

consisted – in toto – of a single phone conversation with BMC’s Senior Manager for Human

Resources (the same company official who had responded to the agency’s initial questions). That

conversation was in turn documented by the agency investigator in a memorandum that consisted

of a total of five sentences, in a mere five lines of text.” See BMC, 30 CIT at ____, 454 F. Supp.

2d at 1327.

It is true that, as the Government notes, the Labor Department’s own regulations require that

the agency make an initial determination on a request for reconsideration within 15 days of receipt

Court No. 04-00229 Page 31

for the proposition that a decision not to issue follow-up questionnaires to resolve a discrepancy may

constitute a ‘failure to investigate’ that renders an agency’s position substantially unjustified.” See

Def.’s Response at 16.

Contrary to the Government’s claim, however, the Labor Department was not entitled to

“make a credibility determination” under the circumstances of the case at bar, and further inquiry

was indeed required. To be sure, the agency may base a TAA determination on statements of

company officials – “if the Secretary reasonably concludes that those statements are creditworthy”

and if the company’s statements “are not contradicted by other evidence.” Former Employees of

Marathon Ashland Pipe Line, LLC v. Chao, 370 F.3d 1375, 1385 (Fed. Cir. 2004) (emphases

added). But where – as in this case – there is a conflict in the evidence, the Labor Department is

“precluded . . . from relying on the representations by the employer” and is obligated to “take further

investigative steps before making [its] certification decision.” Id.; see generally BMC, 30 CIT at

of the request. See Def.’s Response at 38 (citing 29 C.F.R. § 90.18(c)). However, if that is too little

time to conduct a proper investigation, it is within the agency’s power to amend its regulations. The

agency has taken no action to do so. The agency also could have asked the Workers here to agree

to an extension of time, if necessary. But the agency did not do so. Further, having wasted virtually

all of the initial 40-day statutory period provided for the initial investigation of a TAA petition, the

Labor Department should not now be heard to complain that it lacked sufficient time to properly

investigate the Workers’ request for reconsideration. That is classic “boot-strapping.” Squandering

the time allotted for the initial investigation effectively increased the agency’s scope of work at the

stage of the request for reconsideration – but the agency has no one but itself to blame for that.

In any event, the bottom line is that it is absurd to suggest (as the Government does) that the

Labor Department’s investigation of the Workers’ request for reconsideration – which consisted of

a brief phone call from the agency to BMC, as discussed above – consumed any significant portion

of the 15 days allowed by regulation for the conduct of that investigation.

In short, contrary to the Government’s claims, the Labor Department cannot hide behind

statutory and regulatory time limits to excuse its failure to adequately investigate the Workers’ TAA

petition in this case.

Court No. 04-00229 Page 32

____, 454 F. Supp. 2d at 1329-30 (and cases cited there).24

As evidence of substantial justification, the Government also points to the voluntary remand

that it sought to permit the Labor Department to reconsider its denial of the Workers’ TAA petition.

See Def.’s Response at 1, 8-9, 16, 19-20. The Government underscores that it requested the

voluntary remand “within 24 days” after the filing of the Complaint (see Def.’s Response at 8-9, 20),

and argues that the Labor Department “cannot be held to lack substantial justification for failing to

evaluate information that was unavailable to the agency during the administrative proceedings.” See

Def.’s Response at 16.

But the Government’s defense rests on a false premise. There is no truth to the

24

As discussed above, the Government is not entitled to make credibility judgments without

further inquiry under the circumstances of this case in any event. But it is also worth noting that the

administrative record here is devoid of any explanation of the agency’s rationale for crediting

information supplied by BMC over that provided by the Workers. Cf. Inter-Neighborhood Hous.

Corp. v. NLRB, 124 F.3d 115, 122 (2d Cir. 1997) (finding lack of substantial justification where,

in declining to investigate further, agency investigator must have concluded that a witness was lying

and falsifying documents, but where administrative record contained “no basis for such

conclusions”).

Moreover, as the Supreme Court has observed, the trial courts have unique insight into

whether “particular evidence was worthy of being relied upon.” See Pierce v. Underwood, 487 U.S.

at 560. In the case at bar, as in TAA cases generally, the Labor Department’s blind, reflexive

reliance on information provided by employers is problematic. See BMC, 30 CIT at _____, 454 F.

Supp. 2d at 1331-37 (criticizing Labor Department’s longstanding standard practice of “view[ing]

employers as presumptively reliable sources, and treat[ing] any information that they provide as

though it ‘trumps’ information provided by petitioning workers,” even though “there is no apparent

rational basis for treating information supplied by employers as inherently and necessarily more

reliable and authoritative than that provided by petitioning workers – particularly where the

employer’s information is unsworn, unverified, and uncorroborated, or where it conflicts with

information submitted by the petitioning workers”); id., 30 CIT at ____ n.52, 454 F. Supp. 2d at

1337 n.52 (noting that 1992 GAO study identified as a “major” problem the Labor Department’s

practice of relying on “incomplete, inaccurate, or unsubstantiated” information provided by

employers).

Court No. 04-00229 Page 33

Government’s apparent claim that the Workers’ photos of packaged software – as well as other

evidence that BMC mass-replicated its software on physical media including CDs and tapes – were

“unavailable to the agency” prior to the commencement of this action.

The fact is that – throughout both the initial investigation and the reconsideration – the Labor

Department investigators never once contacted the Workers to request or confirm information, much

less to disclose to them the criteria that the agency was then applying to determine whether, as

workers in the software industry, they had been engaged in the “production” of an “article.” See

generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1330 (noting that “the agency never once

contacted the Workers to attempt to reconcile the discrepancies [between the information provided

by BMC and that provided by the Workers], or to solicit information from them . . . – not as part of

the agency’s initial investigation, and not even in response to the request for reconsideration”); n.22,

supra (noting lack of transparency as to criteria applied by agency); n.60, infra (same).

The Workers can hardly be faulted for failing to come forward with evidence to prove that

they satisfied criteria of which they had no knowledge.25 “There can be no doubt that – if the Labor

25

It is – in a word – unseemly for the Government to essentially “blame the victim” for

failing to adduce evidence to meet criteria of which the victim had no knowledge. It is particularly

egregious for the Government to attempt to do so here for the sole purpose of trying to shift the

blame from the Labor Department for the two patently inadequate investigations that it conducted

in this case.

It is all the more troubling that the Government would stoop to criticizing petitioning

workers in a situation such as this for not coming forward with evidence, when the Labor

Department has routinely failed even to criticize – much less take any legal action against –

company officials who affirmatively provide demonstrably false or misleading information to the

agency in the course of TAA investigations. See generally BMC, 30 CIT at ____ & n.39, 454 F.

Supp. 2d at 1330 & n.39 (noting that BMC’s Senior Manager for Human Resources stated to Labor

Department that, inter alia, BMC software was not “recorded on media disks,” nor was it “mass-

produced” or “sold off-the-shelf” – statements which were all “patently and demonstrably false”);

Court No. 04-00229 Page 34

Department [investigators] had bothered to ask the Workers whether BMC’s software is mass-

replicated on physical media and is widely marketed and commercially available (e.g., packaged for

‘off-the-shelf’ sale) – the Workers would have provided to the agency the same photos of shrink-

wrap software that they appended to their Complaint filed with the court.” See BMC, 30 CIT at

____ & n.40, 454 F. Supp. 2d at 1330 & n.40.26 See generally Pierce v. Underwood, 487 U.S. at 560

(emphasizing that, in evaluating existence of “substantial justification,” trial courts have special

insight into whether “critical facts could easily have been verified by the Government”).

Moreover, from the moment that the agency began its initial investigation, the Labor

Department had readily available to it other proof that BMC mass-replicated its software on physical

id., 30 CIT at ____ & nn.51-52, 454 F. Supp. 2d at 1334-37 nn.51-52 (surveying various potential

means of ensuring reliability of information provided to agency in course of TAA investigations,

and noting that “a referral to the U.S. Attorney for potential prosecution . . . of a corporate executive

for material false statements . . . would get the attention of other employers elsewhere across the

country, and send a strong message to company officials everywhere about the importance of

responding to the agency’s inquiries accurately and completely”).

26

The Government’s argument also wrongly assumes that the photos attached to the Workers’

Complaint were the Labor Department’s first clue that BMC produced a tangible “product.” To the

contrary, as discussed elsewhere herein, there was earlier evidence supportive of that fact in the

administrative record. But the agency either overlooked or affirmatively chose not to pursue that

information. See, e.g., BMC, 30 CIT at ____, ____, 454 F. Supp. 2d at 1314, 1326 (noting that

BMC job vacancy announcements attached to Workers’ TAA petition included listings not only for

positions such as “Systems Programmers” and “Programmer Analysts,” but also for positions such

as “Product Developers” and “Sr. Product Developers”) (emphases added); id., 30 CIT at ____,

____ & n.17, ____, 454 F. Supp. 2d at 1315, 1316 & n.17, 1325 (noting that, “in responding to the

Labor Department’s query whether the company’s workers ‘produce an article,’ BMC’s Senior

Manager for Human Resources herself actually used the term ‘products’ – i.e., ‘software products’

– in describing BMC’s business,” and, indeed, referred, in contrast, to the company’s provision of

“services” as well) (emphasis added); id., 30 CIT at ____, ____, 454 F. Supp. 2d at 1317, 1327

(noting that “the Workers’ request for reconsideration insisted that BMC ‘does produce an article

or articles in the form of products,’” “quoted language from the BMC website referring to

‘products,’” and “provided the agency with cites to locations on the BMC website where company

products are sold”).

Court No. 04-00229 Page 35

media, including CDs and tapes. As BMC observed:

[T]he Labor Department’s standard form Petition for Trade Adjustment Assistance

asks that petitioning workers supply the web address for their former employer. The

Workers here complied with that request. . . .

Agency investigators apparently never consulted the company’s website, however.

Had they done so, they would have discovered that the website states that BMC’s

“SIC” code – “Standard Industrial Classification” code – is 7372, which is the

classification code for “Prepackaged Software.” . . . The agency investigators also

would have been able to access BMC’s Form 10-K for the Fiscal Year Ended March

31, 2003 . . . – the most recent report as of the date of the Workers’ termination.

That report describes the work of BMC’s Houston facility as “manufacturing,” and

explains that the company sells its software both “in object code form” and “on a

shrink wrap basis.”

BMC, 30 CIT at ____ & nn.54-55, 454 F. Supp. 2d at 1338-39 & nn.54-55 (emphasis added).

Indeed, in requesting a voluntary remand in this matter, the Government conceded that the Labor

Department had erred in failing to follow up on the URL cites to BMC’s website that the Workers

provided in their request for reconsideration. See Defendant’s Second Amended Motion for

Voluntary Remand, at 3 (citing, as grounds for remand, not only the photos of software attached to

the Workers’ Complaint, but also the reference in the Workers’ request for reconsideration to three

URL locations on BMC website).

In short, there is no merit whatsoever to the Government’s claim that the Labor Department

lacked access to evidence that BMC mass-replicated software on physical media until the Workers

commenced this action. Had the Labor Department conducted a proper investigation, it would have

had conclusive proof of that fact in its possession early in its proceeding. And, as the Workers

correctly note, an agency position that is predicated on a fundamentally inadequate investigation is

not supported by substantial justification. See Pls.’ Application at 20 (citing Hess Mech. Corp. v.

NLRB, 112 F.3d 146, 150 (4th Cir. 1997); Inter-Neighborhood Hous. Corp. v. NLRB, 124 F.3d 115,

Court No. 04-00229 Page 36

122 (2d Cir. 1997)).

What is perhaps most telling, however, is the failure of the Government’s Response even to

acknowledge the Labor Department’s obligation in TAA cases to “marshal all relevant facts” and

to conduct its investigation with “the utmost regard” for the interests of the petitioning workers. See

generally section II.A.1, supra.

As outlined above, the entirety of the Labor Department’s initial investigation consisted of

five generic questions posed to BMC. Even worse, the questions – in effect – impermissibly

delegated to the company the agency’s determination as to whether the Workers were engaged in

the production of an “article.” Moreover, the agency made no effort to follow up on the company’s

non-responsive, “corporate double-talk” answers. And the agency’s determination denying the

Workers’ TAA petition impermissibly distorted what little information the company did provide.

Similarly, the entirety of the Labor Department’s investigation following the Workers’

request for reconsideration consisted of a single, brief phone conversation with the same BMC

official who had responded to the agency’s original five-item questionnaire. The agency then denied

the Workers’ request for reconsideration based solely on that phone conversation. The agency did

not require the BMC official to make a formal statement by reducing her assertions to written form,

much less require their submission under oath. And at no time during either the initial investigation

or the investigation following the Workers’ request for reconsideration did the Labor Department

contact the Workers to confirm the accuracy of the information provided by BMC (to verify, for

example, whether the company produces software on physical media), or to solicit additional

evidence to support their petition. See generally Pierce v. Underwood, 487 U.S. at 560 (recognizing

that trial courts have special insight into whether “critical facts could easily have been verified by

Court No. 04-00229 Page 37

the Government”).

The Labor Department further failed to consult BMC’s website, either in the course of its

initial investigation or its investigation following the Workers’ request for reconsideration – even

though the agency’s petition form specifically requests the address of the website of the petitioning

workers’ former employer, and even though the Workers’ request for reconsideration expressly

directed the agency to three URL locations on BMC’s website. Had the agency consulted BMC’s

website, it would have learned that the company does indeed sell software on physical media, and

it would have noted that BMC’s SIC code was listed as 7372 – “Prepackaged Software.” In other

words, as BMC observed, “a few quick clicks of a computer mouse by a Labor Department

investigator would have sufficed to expose the falsity of the information provided to the agency”

by the BMC official on which the agency relied. See generally BMC, 30 CIT at ____ & nn.54-55,

57, 454 F. Supp. 2d at 1337-39 & nn.54-55, 57; Pierce v. Underwood, 487 U.S. at 560 (noting trial

court’s special insight into whether “critical facts could easily have been verified by the

Government”).

The Labor Department also took no steps to conduct any independent investigation to

confirm the accuracy of the information provided by BMC. For example, the agency did not review

the company’s most recent Form 10-K, which would have disclosed that BMC in fact does sell

software on physical media, and that its SIC code was listed as 7372 (i.e., “Prepackaged Software”).

See generally Pierce v. Underwood, 487 U.S. at 560 (acknowledging trial court’s special insight into

whether “critical facts could easily have been verified by the Government”). Nor did the agency

otherwise seek to corroborate the information supplied by BMC in any way.

While “[t]he EAJA does not tell an agency how to handle a case,” the agency “cannot decline

Court No. 04-00229 Page 38

to conduct further inquiry and then plead [its] own failure to investigate as reason to conclude that

[its] position was substantially justified.” Hess Mech. Corp., 112 F.3d at 150. That is – in effect

– precisely what the Government and the Labor Department have sought to do here.27

The Labor Department’s first two investigations in this case – the initial investigation, and

the investigation conducted in response to the request for reconsideration – would not provide

“substantial justification” for the Government’s position, even if the agency owed no special

obligation to petitioning workers. The unique nature of the Labor Department’s responsibilities in

its administration of the TAA program simply strengthens the Workers’ hand.

27

The Workers drive this point home in their Reply:

[The Workers’] arguments and the Court’s criticisms of Labor’s actions primarily

concern [the Labor Department’s] omissions and inactions, as a matter of practice

and in this case in particular, in formulating its meager administrative record, and not

the subsequent legal position formed from interpreting or understanding that meager

administrative record. . . . [I]t is precisely Labor’s failure to investigate and form a

sufficient record that is without substantial justification. . . .

. . . If Labor could argue that its legal positions were substantially justified whenever

it evaluates what is in the record, no matter how limited or inadequate that record,

it would create a dangerous incentive for administrative agencies to engage in even

more perfunctory investigations than is already the case. . . .

This absurd result is no straw man. [The Government’s] Response admits that Labor

essentially chose to stay ignorant of facts that were clearly discoverable through a

modicum of investigation. . . .

In essence, [the Government] suggests that Labor’s legal positions were substantially

justified even though they relied on an administrative record that lacked essential,

readily-available information, because the jobless TAA petitioners were responsible

for spoon-feeding Labor . . . all relevant information. The Court has clearly

disagreed with this characterization of Labor’s TAA obligations as so limited.

Pls.’ Reply at 2-4 (footnote omitted).

Court No. 04-00229 Page 39

A recitation of the facts of this case alone suffices to refute any suggestion that the agency

here properly discharged its duties to “marshal all relevant facts” and to conduct its investigation

with “the utmost regard” for the interests of the Workers, and – further – definitively establishes that

there was no “substantial justification” for the Government’s position at the administrative level.

See Gavette v. Office of Personnel Management, 808 F.2d 1456, 1467 (Fed. Cir. 1986) (holding that

“‘substantial justification’ requires that the Government show that it was clearly reasonable in

asserting its position, including its position at the agency level, in view of the law and the facts”)

(footnote omitted).28

3. The Government’s Position in Litigation

The Government also argues that its position in litigation was substantially justified. See

generally Def.’s Response at 19-23. According to the Government, in evaluating “substantial

justification,” “the relevant question is whether the Government notified the Court [of the need for

a voluntary remand] within a reasonable amount of time after reviewing the record and determining

that the agencies needed to address the discrepancies in the record.” See Def.’s Response at 20.

28

The conclusion that the Government’s position at the administrative level was not

substantially justified is buttressed by the Labor Department’s “track record” in other TAA cases

filed with the Court of International Trade in recent years. See Pierce v. Underwood, 487 U.S. at

569 (noting that “a string of losses can be indicative” on the issue of “substantial justification”);

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1352-54 (summarizing statistics concerning TAA actions

filed with Court of International Trade in recent years, and noting that – at least during four year

period analyzed – agency never successfully defended a denial of a TAA petition without at least

one remand).

Strong language criticizing the Government’s position in an opinion on the “merits” of a case

has also been held to be evidence in support of an award of fees. See Marcus v. Shalala, 17 F.3d at

1038. On this point, the language of BMC speaks for itself. See generally BMC, 30 CIT ____, 454

F. Supp. 2d 1306, passim.

Court No. 04-00229 Page 40

However, the Government cannot cure a lack of substantial justification at the administrative level

by prompt action in litigation. Cf. BMC, 30 CIT at ____, 454 F. Supp. 2d at 1339-40 & nn.59-60

(noting that “the Labor Department’s modus operandi increasingly is to seek a voluntary remand

in TAA cases that are appealed to the court” and that “[r]equests for voluntary remands have become

all but routine”).29

On the facts of this case, even assuming that the Government’s position in litigation was

substantially justified, the overall position of the United States was not. See generally Chiu v.

United States, 948 F.2d at 715 (noting, with approval, that – in making EAJA award – trial court

“assumed the government’s position in litigation . . . to be reasonable, but found that the lack of

substantial justification [for the agency’s action at the administrative level] outweighed any

reasonable positions taken thereafter”).

“As exemplified in the EAJA and Fed. R. Civ. P. 11, . . . the processes of litigation

presuppose some reasonable investigation . . . ” Hess Mech. Corp., 112 F.3d at 150; cf. id. at 147

(criticizing “flimsiness” of administrative record of investigation). In the case at bar, much like

Chiu, the Labor Department’s perfunctory, pro forma treatment of the Workers’ TAA petition at the

administrative level had the substantial effect of depriving the Workers of the critical trade

adjustment benefits to which they were entitled for months, while the litigation phase was relatively

29

See also BMC, 30 CIT at ____, 454 F. Supp. 2d at 1340 (observing that “a voluntary

remand affords the Labor Department an opportunity to ‘doctor’ the record of its initial

investigation, by eliciting information that the agency should have obtained previously, and then

using that information to ‘beef up’ the administrative record before the agency’s determination is

subjected to judicial review,” allowing the Labor Department to “avoid[] much of the harsh criticism

it would have drawn had a court reviewed the agency’s determination based solely on the record

developed in the initial investigation”).

Court No. 04-00229 Page 41

abbreviated and involved little consideration of the merits of the case. As such, here – as in Chiu

– “any justification for the litigation phase cannot outweigh the lack of substantial justification for

the original agency action.” Chiu v. United States, 948 F.2d at 715 (quoting Chiu v. United States,

17 Cl. Ct. 334, 340 (1989)).

Accordingly, there is no need to parse the Government’s conduct of this litigation before

concluding that, for purposes of an EAJA award, the Government’s position was not substantially

justified. See, e.g., Kelly v. Nicholson, 463 F.3d at 1355 (concluding that government’s position

was not substantially justified based solely on lack of justification for agency’s actions at

administrative level); Scarborough v. Nicholson, 19 Vet. App. 253, 260 (2005) (noting that, where

agency conceded that its position at the administrative level was not substantially justified, fee

applicant had “cleared the substantial-justification hurdle” for EAJA award eligibility, obviating

need to consider agency’s position in litigation); Role Models America, Inc. v. Brownlee, 353 F.3d

962, 967-68 (D.C. Cir. 2004) (noting that, even assuming that government’s litigation position was

“substantially justified,” plaintiff was eligible for EAJA award based on lack of substantial

justification for agency’s actions); cf. Former Employees of Tyco Electronics v. U.S. Dep’t of

Labor, 28 CIT 1571, 1586 n.2, 350 F. Supp. 2d 1075, 1089 n.2 (2004) (finding a lack of substantial

justification in TAA case without considering Labor Department’s position at the administrative

level, where “the Government’s position during . . . litigation was not substantially justified”).

Because the Government’s position in this matter was not substantially justified, the Workers

are entitled to an award of attorneys’ fees and expenses under the EAJA. What remains to be

determined is the amount of that award.

Court No. 04-00229 Page 42

B. Calculation of the EAJA Award

To determine the size of a reasonable award of attorneys’ fees under EAJA, the court

calculates a “lodestar” figure, arrived at by multiplying “the number of hours reasonably expended”

by “a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. at 433. “[T]he fee applicant bears

the burden of establishing entitlement to an award and documenting the appropriate hours expended

and hourly rates.” Id. at 437.

The EAJA requires that an applicant submit “an itemized statement . . . stating the actual

time expended and the rate at which fees and other expenses were computed.” 28 U.S.C. §

2412(d)(1)(B); see generally Naporano Iron and Metal Co. v. United States, 825 F.2d 403, 404 (Fed.

Cir. 1987). Thus, “[t]he party seeking an award of fees should submit evidence supporting the hours

worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. at 433. “The court needs

contemporaneous records of exact time spent on the case, by whom, their status and usual billing

rates.” Naporano Iron and Metal Co., 825 F.2d at 404 (citation omitted); accord Owen v. United

States, 861 F.2d 1273, 1275 (Fed. Cir. 1988) (explaining that “[c]ontemporaneous records of the

exact time spent by attorneys on a case [as well as] their status and usual billing rates” are “essential

to support [an EAJA] claim”).

While the fee applicant “bears the burden of documenting the appropriate hours expended,

‘the party opposing the fee application has a burden of rebuttal that requires submission of evidence

. . . challenging the accuracy and reasonableness of the hours charged.’” Sneede v. Coye, 856 F.

Supp. 526, 535 (N.D. Cal. 1994) (quoting Gates v. Deukmejian, 987 F.2d 1392, 1397-98 (9th Cir.

1993)). Further, the Government must assert its challenges to the fee application with a relatively

Court No. 04-00229 Page 43

high degree of specificity – both for the benefit of the fee applicant, and for the benefit of the court.30

“In a statutory fee case, the party opposing the fee award . . . has the burden to challenge, by

affidavit or brief with sufficient specificity to give fee applicants notice, the reasonableness of the

requested fee.” Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990) (emphasis added) (citing

Bell v. United Princeton Properties, Inc., 884 F.2d 713 (3d Cir. 1989)). “Only with proper notice

can the [fee] claimant know which [billing entries] . . . to defend as reasonable.” United States v.

Eleven Vehicles, 200 F.3d 203, 212 (3d Cir. 2000); see also Rode v. Dellarciprete, 892 F.2d at 1188

(explaining that objections must be sufficiently specific to “serve the . . . function of putting the

applicant on notice that it must defend its fee position”) (quoting Bell v. United Princeton Properties,

884 F.2d at 720).

Thus, for example, “the adverse party’s submissions cannot merely allege in general terms

that the time spent was excessive. In order to be sufficient, the briefs or answers challenging the fee

request must be clear in two respects. First, they must generally identify the type of work being

challenged, and second, they must specifically state the adverse party’s grounds for contending that

the hours claimed in that area are unreasonable. The briefs must be specific and clear enough that

the fee applicants have a fair chance to respond and defend their request.” Bell v. United Princeton

Properties, 884 F.2d at 720 (footnote omitted) (quoted in Interfaith Community Organization v.

30

The Government notes in its Response that “[i]f the opposing party objects to the number

of hours proffered, that party must, through affidavit or brief, provide notice with sufficient

specificity to the fee applicant the portion of the fee petition which must be defended.” See Def.’s

Response at 31 (citing Walton v. Massanari, 177 F. Supp. 2d 359, 361 (E.D. Pa. 2001)). The

Government thus seems to recognize – at least in principle – its obligation to frame its objections

with sufficient specificity to give the Workers and the Court effective notice of the billing entries

that it challenges. As discussed below, however, the Government generally falls short in its

observance of that obligation.

Court No. 04-00229 Page 44

Honeywell Int’l, Inc., 426 F.3d 694, 713-14 (3d Cir. 2005)).31

“Where an opposing party lodges a sufficiently specific objection to an aspect of a fee award,

the burden is on the party requesting the fees to justify the size of its award.” Interfaith Community

Organization, 426 F.3d at 713 (emphasis added). “The more specific the objections to a fee

application are, the more specific the [court’s] findings and reasons for rejecting those objections

can be.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1196-97 (11th Cir. 2002) (quoting

American Civil Liberties Union of Georgia v. Barnes, 168 F.3d 423, 428-29 (11th Cir. 1999)); see

also Interfaith Community Organization, 426 F.3d at 713 (observing that a court reviewing

objections to a proposed fee award “is entitled to help from the fee objector”). And “a boilerplate

objection merits no more . . . [than] a boilerplate response.” Oxford Asset Mgmt., 297 F.3d at 1197.

1. The Number of Hours Reasonably Expended by Counsel

“[T]he number of hours reasonably expended on the litigation” is one of two key components

in calculating a reasonable fee under the EAJA. Hensley v. Eckerhart, 461 U.S. at 433. The fee

applicant must submit “evidence supporting the hours worked.” Hensley v. Eckerhart, 461 U.S. at

433. Counsel are “not required to record in great detail how each minute of [their] time was

expended. But at least counsel should identify the general subject matter of [their] time

expenditures.” Hensley v. Eckerhart, 461 U.S. at 437 n.12 (citing Nadeau v. Helgemoe, 581 F.2d

31

See, e.g., Bell v. United Princeton Properties, 884 F.2d at 722 (reversing trial court’s

reduction of time claimed by fee applicant, where opposing party’s categorical objection failed to

give fee applicant adequate notice of specific billing entries subject to challenge); Walton v.

Massanari, 177 F. Supp. 2d at 363 (rejecting objections to fee award as insufficiently specific; party

opposing award “failed to meet its burden of challenging the fee petition with sufficient specificity

to provide notice to counsel of that portion of the fee petition which must be defended”).

Court No. 04-00229 Page 45

275, 279 (1st Cir. 1978)); see also Naporano Iron and Metal Co., 825 F.2d at 404 (“itemized

statement” submitted by fee applicant must be sufficiently detailed to show “specific task[s]

performed”).

Moreover, a fee applicant “should make a good-faith effort to exclude from a fee request

hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice

ethically is obligated to exclude such hours from his fee submission.” Hensley v. Eckerhart, 461

U.S. at 434.

“In the private sector, ‘billing judgment’ is an important component in fee setting.

It is no less important here. Hours that are not properly billed to one’s client also are

not properly billed to one’s adversary pursuant to statutory authority.”

Hensley v. Eckerhart, 461 U.S. at 434 (quoting Copeland v. Marshall, 641 F.2d 880, 891 (1980) (en

banc)).

Of course, the mere fact that a fee applicant seeks compensation for all time spent on a case

does not mean, ipso facto, that the party failed to exercise the “billing judgment” required by

Hensley. See City of Riverside v. Rivera, 477 U.S. 560, 569 n.4 (1986). “Hensley requires a fee

applicant to exercise ‘billing judgment’ not because he should necessarily be compensated for less

than the actual number of hours spent litigating a case, but because the hours he does seek

compensation for must be reasonable.” Id.32

32

As a practical matter, billing judgment may be exercised either when an attorney’s time is

recorded (i.e., when the attorney decides whether to record time spent on an activity, or whether to

essentially “write it off”), or when a billing statement is prepared (i.e., when the billing attorney

reviews all records of time recorded as chargeable to a particular client account, and decides whether

to “write off” any of that time).

Review of the Itemized Billing Statement included with the Workers’ Application reveals

the exercise of billing judgment by counsel in this case. As one example, in a number of instances,

Court No. 04-00229 Page 46

Thus, “[t]he touchstone in determining whether hours have been properly claimed is

reasonableness.” Davis v. City and County of San Francisco, 976 F.2d 1536, 1543 (9th Cir. 1992),

reh’g denied, vacated in part, and remanded, 984 F.2d 345 (9th Cir. 1993). And “[t]he assessment

of reasonableness is made by reference to standards established in dealings between paying clients

and the private bar.” Id.

As outlined in section II.B above, while the fee applicant bears the burden of establishing

the reasonableness of the fees claimed, the Government must raise any objections with appropriate

specificity, both for the benefit of the fee applicant, and for the benefit of the court. See, e.g., United

States v. Eleven Vehicles, 200 F.3d at 212 (explaining that “[o]nly with proper notice can the [fee]

claimant know which [billing entries] . . . to defend as reasonable”); Interfaith Community

Organization, 426 F.3d at 713 (noting that a court reviewing objections to a proposed fee award “is

entitled to help from the fee objector”).

As a general rule, objecting parties must “point to all the [billing] entries that they believe

to be unreasonable.” Bell v. United Princeton Properties, 884 F.2d at 720; see also Oxford Asset

Mgmt., 297 F.3d 1182 (dismissing general, “boilerplate objection”). However, when such a

requirement would be impractical – such as when the objecting party contends “that the time spent

by a fee applicant was excessive in light of counsel’s expertise, or in light of the simplicity of the

case” – the objecting party “need only specify with particularity the reason for its challenge and the

an attorney recorded time spent meeting with another attorney; but there is no parallel billing entry

for the second attorney, because the second attorney’s time was “written off” (either by the second

attorney, or – subsequently – by the billing attorney). But see Role Models America, 353 F.3d at

972 (criticizing billing documentation for inconsistency where “one attorney’s records indicate that

he or she spent time meeting with another attorney, while the second attorney’s records report no

such meeting”).

Court No. 04-00229 Page 47

category (or categories) of work being challenged; it need not point to each individual excessive

entry.” Bell v. United Princeton Properties, 884 F.2d at 720-21.

Once the Government raises a sufficiently specific objection to a proposed fee award, the

burden is on the fee applicant to defend the size of the proposed award. See, e.g., Interfaith

Community Organization, 426 F.3d at 713. “It is true that ‘[s]worn testimony that, in fact, it took

the time claimed is evidence of considerable weight on the issue of the time required in the usual

case and therefore [to justify a reduction of the hourly rate], it must appear that the time claimed is

obviously and convincingly excessive under the circumstances.’” Oxford Asset Mgmt., 297 F.3d

at 1196 (quoting Perkins v. Mobile Housing Board, 847 F.2d 735, 738 (11th Cir. 1988)). However,

“giving weight to sworn statements of fee applicants does not mean accepting those statements as

gospel.” American Civil Liberties Union of Georgia, 168 F.3d at 430 (quoted in Oxford Asset

Mgmt., 297 F.3d at 1196).

Accordingly, hours may be reduced or disallowed where, for example, “the documentation

. . . is inadequate,” or where the hours expended were “excessive, redundant, or otherwise

unnecessary,” such as where a case was “overstaffed.” See Hensley v. Eckerhart, 461 U.S. at 433-34

(citation omitted). “Hours are not reasonably expended if an attorney duplicates work done earlier

by another attorney, if an attorney takes extra time due to inexperience, or if an attorney performs

tasks that are normally performed by paralegals, clerical personnel or other non-attorneys.” Action

on Smoking & Health v. Civil Aeronautics Board, 724 F.2d 211, 220-21 (D.C. Cir. 1984).

As the Supreme Court has emphasized, the trial court generally is “in the best position to

determine whether the time expended by [fee applicant’s] counsel was reasonable.” See City of

Riverside v. Rivera, 477 U.S. at 573 n.6; accord Case v. Unified School Dist., 157 F.3d 1243, 1249

Court No. 04-00229 Page 48

(10th Cir. 1998) (observing that deference to trial court is appropriate, because trial court “‘saw “the

attorneys’ work firsthand,”’” and because appellate court “is not well suited to assess the course of

litigation and the quality of counsel”) (quoting Poolaw v. City of Anadarko, 738 F.2d 364, 368 (10th

Cir. 1984) (quotation omitted)); Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 551 (7th Cir.

1999) (noting that trial court’s judgment on reasonableness of hours expended on litigation is

entitled to “great deference”; “By virtue of its familiarity with the litigation, the [trial] court certainly

is in a much better position than [the court of appeals] to determine the number of hours reasonably

expended.”) (quotation omitted).

In support of their Application, the Workers here have submitted a computer-generated

Itemized Billing Statement of the time expended in this action, accompanied by an affidavit of

counsel. See Pls.’ Exhs. 5-6, 8. The affiant attests, inter alia, that the rates reflected in the Itemized

Billing Statement are the standard hourly rates that counsel’s law firm charges for each of the

individual “timekeepers” listed. See Pls.’ Application at Exh. 8 ¶ 2. The Itemized Billing Statement

lists entries in chronological order, and – for each entry – provides the date the work was done, the

name of the timekeeper who did the work, the number of hours billed (in quarter hours), the total

fee for the time billed in the entry, and a summary description of the tasks as provided by the

timekeeper. See Pls.’ Application at Exhs. 5-6.33 The Application also specifies the total fees

33

The Itemized Billing Statement submitted as Plaintiffs’ Exhibit 5 reflects time charged at

the EAJA rate of $125 per hour, while the Itemized Billing Statement submitted as Plaintiffs’

Exhibit 6 reflects time charged at the standard billing rates that the law firm charges to paying

clients.

As is common practice, a billing entry cumulates the time for all tasks billed by an individual

to the client account on a given day. But see Role Models America, 353 F.3d at 971 (reducing

proposed fee award where, inter alia, “many time records lump together multiple tasks, making it

Court No. 04-00229 Page 49

calculated both at counsel’s standard hourly rates, and at the EAJA rate of $125 per hour. See Pls.’

Application at 26-27; Id. at Exhs. 5-6, 8.

The Government mounts a scattershot attack, taking issue with virtually every aspect of the

Workers’ Application. But much of the Government’s Response is basic “boilerplate,” devoid of

case-specific analysis.34 Further, the Government fails to clearly distinguish between its various

theories for disallowance of the Workers’ fee claims. For example, caselaw on the disallowance of

claims for insufficient documentation is intertwined with caselaw on the disallowance of claims for

tasks that are – by their nature – non-compensable, as well as caselaw on the disallowance of

duplicative or otherwise excessive claims. See generally Def.’s Response at 24-32.

In addition, much of the Government’s Response consists of one-line summaries of, or

quotes from, decisions in fee litigation where claims were disallowed. But that survey of caselaw

is of limited utility at best, because the Government gives little indication as to the relevance or

application of that caselaw to the fee claims at issue here, or the Government’s objections thereto.

Compare Def.’s Response at 23-27, 29-32 (generally surveying caselaw) and Def.’s Response at 27-

29, 32-33 (addressing fee claims in this case). Most critically – to the extent that it does address the

case at bar – the Government largely contents itself with broadbrush statements.35

impossible to evaluate their reasonableness”) (citation omitted).

34

Apart from its discussion of the Workers’ claims for enhanced fees for “special factors” and

a cost of living adjustment, the Government devotes a mere three-and-one-quarter pages to case-

specific analysis and argument concerning the appropriate size of the Workers’ award. See Def.’s

Response at 27-29, 32-33.

35

The Reply filed by the Workers here left something to be desired as well. See generally

Interfaith Community Organization, 426 F.3d at 713 (noting that, once the Government raises a

sufficiently specific objection to a proposed fee award, the burden is on the fee applicant to defend

Court No. 04-00229 Page 50

According to the Government, the award sought must be reduced to eliminate hours billed

early in the case, as well as hours billed after the Workers filed their comments on the Labor

Department’s certification determination (other than time spent preparing the fee application itself).

See Def.’s Response at 29. The Government also claims that the billing documentation supplied by

the Workers’ counsel is insufficient, and that any award therefore must be further pruned. See

Def.’s Response at 32. In addition, the Government contends that the case was overstaffed, that the

research conducted by the Workers’ counsel was excessive, that some tasks billed “bear no direct

relation to the litigation of [the Workers’] claims,” and that other tasks were largely administrative

or clerical in nature and are therefore non-compensable. See Def.’s Response at 32-33.

However, the Government specifically targets only a handful of billing entries, labeling them

as “examples” – apparently leaving it to the Court to scour the billing statement line-by-line to

identify other similar entries to flesh out the Government’s challenge. See generally Def.’s

Response at 32-33 (quoting various billing entries as “examples” of objectionable charges); but see

Interfaith Community Organization, 426 F.3d at 713 (noting that a court reviewing objections to a

proposed fee award “is entitled to help from the fee objector”).36 And even as to the “examples” that

it provides, the Government fails to supply the requisite citations to the Workers’ Application, much

less the specific dates of the quoted billing entries. See generally Def.’s Response at 32-33 (quoting

the size of the proposed award). Rather than addressing the numerous objections raised by the

Government (albeit in “drive-by” form), the Workers limited their Reply to just two issues – the

threshold issue of “substantial justification,” and the Workers’ claim to a “special factors”

enhancement of their fee award. See generally Pls.’ Reply.

36

See also Portland Audubon Society v. Lujan, 865 F. Supp. 1464, 1477 (D. Or. 1994)

(noting that a court “should not be asked to engage in an ‘hour-by-hour analysis of the fee request’”)

(quoting Gates v. Deukmejian, 987 F.2d at 1399).

Court No. 04-00229 Page 51

various billing entries, but providing no supporting citations to the Workers’ Application).

In any event, as discussed in greater detail below, the Government’s various objections to

the Workers’ Application are generally wide of the mark.

a. Fees for Services Rendered Prior to Filing of Complaint/Notice of Appearance

The Government asserts, among other things, that fees for services rendered “before the

complaint was filed and before [counsel’s] notice of appearance was filed” should be disallowed.

See Def.’s Response at 33; see also id. at 29 (arguing that award should be limited to fees incurred

“from the date counsel for petitioners filed a notice of appearance”). But the Government’s

argument finds no support in either the facts or the law.

Contrary to the Government’s claims, none of the services at issue here were rendered before

the Complaint in this action was filed. As discussed above, the Workers’ June 1, 2004 letter to the

Court seeking review of the Labor Department’s denial of their TAA petition was deemed the

Complaint, filed as of June 3, 2004. In contrast, the first billing entry is for services rendered on

June 4, 2004 – the day after the filing of the Complaint. See Pls.’ Application. The Government’s

argument thus cannot be reconciled with the facts of this case.

Moreover, the Government points to no legal authority to support its position. Curiously,

the Government cites Levernier for the proposition that “pre-complaint fees while administrative

proceedings are still pending are not allowable.” Def.’s Response at 26 (citing Levernier Constr.,

Inc. v. United States, 947 F.2d 497, 502 (Fed. Cir. 1991)). As discussed above, however, that

principle has no relevance in light of the facts here, where no fees are sought for the period prior to

the filing of the Complaint.

Court No. 04-00229 Page 52

What the Government fails to acknowledge is that Levernier squarely rejected the claim that

“the only pre-complaint efforts for which EAJA would permit compensation are those related to

drafting the complaint.” Levernier, 947 F.2d at 501 n.2 (holding that “fees for legal and factual

research preparatory to . . . litigation” are compensable under EAJA); see also Cox Constr. Co. v.

United States, 17 Cl. Ct. 29, 34 n.2 (1989) (same).

The law elsewhere in the country is to the same effect. As a general principle, “reasonable

work at all stages of the litigation is compensable, including prefiling work.” A. Hirsch & D.

Sheehey, Awarding Attorneys’ Fees and Managing Fee Litigation 28 (Federal Judicial Center 2d

ed. 2005) (citation omitted); see also, e.g., Dowdell v. City of Apopka, Fla., 698 F.2d 1181, 1188

(11th Cir. 1983) (rejecting claim that fee award should exclude hours “prior to the lawyer-client

relationship”). Accordingly, contrary to the Government’s assertions, timing alone provides no

basis for disallowing fees for services rendered prior to July 23, 2004, when the Workers’ pro bono

counsel filed their Notice of Appearance in this matter.

b. Fees for Services Rendered After Filing of Workers’ Comments on TAA Certification

Just as the Government contests the Workers’ claim for fees for services rendered early in

this litigation, the Government similarly disputes the compensability of services rendered late in the

case. The Government asserts that – other than compensation for the preparation of the fee

application itself – fees should be denied for services rendered after “the date [the Workers] filed

comments indicating that they accepted Labor’s certification determination”37 – that is, after January

37

The Government begins its argument inauspiciously, by fundamentally mischaracterizing

the position taken by the Workers in their Comments on Defendant’s Determination on Remand.

Contrary to the Government’s assertion, the Workers did not “indicat[e] that they accepted Labor’s

Court No. 04-00229 Page 53

18, 2005. See Def.’s Response at 29. This argument, too, is without merit.

In particular, the Government challenges the time that the Workers’ counsel spent on

“briefing regarding the calculation of benefits [which] occurred after the agency certified

petitioners.” See Def.’s Response at 28. The Government accuses the Workers’ counsel of

“engag[ing] the Court and the Government in a needless colloquy regarding the hypothetical

circumstance of a miscalculation of benefits,” which (according to the Government) “[the] Court

lacks jurisdiction to determine in any event.” Id. at 28-29. The Government asserts that the efforts

of the Workers’ counsel “only protracted the litigation after certification.” Id. at 28-29.38 However,

the Government has no one but itself to blame for the post-certification briefing to which it objects.

certification determination.” See Def.’s Response at 29. Instead, the Workers advised that, while

they were “generally satisfied” with the remand outcome itself, they were dissatisfied with the

language of the Notice of Revised Determination on Remand, because it did not reflect certain

assurances that the Government had previously given. The Workers therefore asked that the Court

“expressly order, in accordance with Defendant’s [previous] representation, that Plaintiffs, having

been certified, are entitled to receive full TRA benefits, regardless of the date of their certification.”

See Plaintiffs’ Comments on Defendant’s Determination on Remand. As detailed below, the

Government’s response to that request for relief by the Workers is what triggered the post-

certification briefing to which the Government here objects.

38

The Government intimates that the post-certification briefing prevented the Workers from

applying to state authorities for, and receiving, their individual TAA benefits. See Def.’s Response

at 29 (asserting that “[i]t can hardly be reasonable to conclude that [the Workers] would prefer to

wait an additional year for extended briefing over an issue that was irrelevant to certification than

to have Labor’s certification determination sustained so that they may present the certification to the

relevant state agencies for issuance of benefits”). The Government is simply wrong.

As documents filed in this action demonstrate, the Workers were proceeding with the

application process at the state level, in parallel with the post-certification briefing. See, e.g., Letter

to Court from Plaintiffs (May 19, 2005) (detailing the numerous challenges the Workers were

encountering in obtaining their TAA benefits through the Texas Workforce Commission, but noting

that some of the Workers had already been permitted to enroll in training programs).

Court No. 04-00229 Page 54

See generally Pls.’ Application at 9-12, 14, 21-22, 27-28.39

As discussed in section I above, the Government sought an additional 60 days to file the

results of the voluntary remand, above and beyond the 60-day period initially granted for the remand

investigation. Counsel for the Government induced the Workers’ consent to the requested extension

of time – and the Court’s entry of an order granting that extension – with express, unequivocal

assurances that “in the event petitioners are certified in this case, the petitioners would be entitled

to receive full TRA benefits regardless of the date they are certified.” See BMC, 30 CIT at ____,

454 F. Supp. 2d at 1345-46 (quoting Defendant’s Consent Motion for an Extension of Time to File

Remand Results, at 3-4).40

When the Labor Department’s remand results eventually issued, however, there was no

language reflecting the unconditional assurances that the Government had previously given.

Concerned, the Workers urged the Court to “expressly order[ ], in accordance with Defendant’s

representation, that Plaintiffs, having been certified, are entitled to receive full TRA benefits,

regardless of the date of their certification.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1346

39

At various points, the Government charges the Workers’ counsel with “unexplained and

continuing efforts to prolong senselessly the litigation,”and asserts that they “senselessly delayed

litigation,”when they “could have resolved the litigation expeditiously.” See Def.’s Response at 22,

28, 38-39. However, as detailed herein, the work by the Workers’ counsel that the Government

targets was entirely justified. There is, therefore, no cause here to “reduce the amount to be awarded

. . . , or deny an award” because the prevailing party “engaged in conduct which unduly and

unreasonably protracted the final resolution of the matter in controversy.” See 28 U.S.C. §

2412(d)(1)(C); see also 28 U.S.C. § 2412(d)(2)(D) (providing that “fees and expenses may not be

awarded to a party for any portion of the litigation in which the party has unreasonably protracted

the proceedings”).

40

See also Letter to Court from Plaintiffs (Feb. 11, 2005) (“Given the Government’s

representation, Plaintiffs consented to an extension of time, expressly predicated on their belief that,

should they prevail, they would not be prejudiced as a result of [that extension]”).

Court No. 04-00229 Page 55

(quoting Plaintiffs’ Comments on Defendant’s Determination on Remand, at 1-2). The Government

responded flatly that the Court lacked jurisdiction to enforce the representations that the

Government’s counsel had made to the Court and to the Workers. See id. (citation omitted).41

The Government’s position precipitated the several rounds of post-certification submissions

by the parties – all of which were filed in direct response to orders of, or letters from, the Court.

Those directives were generally intended to ensure that the Workers’ receipt of the various types of

TAA benefits would be unaffected by the Labor Department’s protracted delays in certifying the

Workers as eligible to apply for TAA benefits, in accordance with the assurances that the

Government had previously given the Court and the Workers.42

The Workers’ concerns were by no means trumped up.43 The Workers had more than ample

41

See generally Defendant’s Response to Plaintiffs’ Comments In Response to Labor’s

Remand Determination, at 3 (arguing that “although Labor confirms that the delay from litigation

will not affect the calculation of benefits . . ., the Court lacks the authority to dictate whether the

petitioners will, in fact, receive ‘full’ TRA benefits,” and characterizing as “inappropriate” the

Court’s inquiry into the effects, if any, of litigation delays on relief ultimately available in a TAA

case).

42

See Remand Order (Aug. 11, 2004); Plaintiffs’ Comments on Defendant’s Determination

on Remand; Defendant’s Response to Plaintiffs’ Comments in Response to Labor’s Remand

Determination; Letter to Defendant from the Court (Feb. 4, 2005); Defendant’s Memorandum of

Law in Response to the February 4, 2005 Order; Letter to Court from Plaintiffs (Feb. 11, 2005);

Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’ Comments on Remand Results; Letter to

Parties from Court (May 12, 2005); Defendant’s Memorandum of Law in Response to the May 12,

2005 Order; Letter to Court from Plaintiffs (May 19, 2005).

43

The Government’s suggestions to the contrary are at odds with reality and with the record

in this action as well as those in other TAA cases filed with the Court of International Trade in

recent years. The Government states, for example, that “there was no evidence whatsoever . . . that

the state agency administering benefits would deviate from [the] position [that delays in certification

would have no effect on the Workers’ benefits].” See Def.’s Response at 22. But the Government

ignores the fact that workers in other cases in fact had experienced serious problems as a result of

delayed certification. See generally BMC, 30 CIT at ____ n.63, 454 F. Supp. 2d at 1341 n.63

Court No. 04-00229 Page 56

reason to be concerned about the real-life effects of delayed certification on their benefits. As BMC

explained, “[w]orkers who are belatedly awarded TAA benefits receive no interest or other

compensation for the delay that they suffer. At best, such workers receive – months (or even years)

after the fact – the same funds and training that they were entitled by statute to receive much earlier.

Worse yet, all too often, delay effectively operates to reduce (and conceivably even eliminate)

benefits to which workers are otherwise entitled by law.” BMC, 30 CIT at ____ & n.63, 454 F.

Supp. 2d at 1341-42 & n.63 (emphasis added) (detailing the numerous ways in which delayed

certification may negatively affect workers’ ability to receive TAA benefits including training funds,

as well as both “Basic” and “Additional” TAA income support payments (known as “Trade

Readjustment Allowance” or “TRA” payments)).44

For example, in at least three cases (i.e., Tyco, Oxford Automotive, and Ericsson), displaced

(discussing, inter alia, problems faced by workers in Tyco, Oxford Automotive, and Ericsson). And

the record reflects that the Workers here experienced problems as well. See Letter to Court from

Plaintiffs (May 19, 2005) (documenting problems that the Workers experienced with Texas state

authorities).

44

It is thus disingenuous for the Government to dismiss the Workers’ fears as worries about

the potential for “miscalculation of benefits” by state authorities. See Def.’s Response at 28-29

(emphasis added). The Workers were worried – and quite properly so – not that Texas Workforce

Commission personnel would “miscalculat[e]” their benefits, but rather that the delays in the Labor

Department’s certification would effectively operate to deprive the Workers of some of the benefits

to which they were otherwise entitled.

The Government’s assertion that the Workers’ concerns were “irrelevant to certification” is

even more absurd. See Def.’s Response at 22, 29; see also id. at 39 (characterizing Workers’

concerns as “irrelevant to the substance of Labor’s determination”). The Government cannot argue

with a straight face that a diminution in benefits directly caused by delays in certification attributable

to the Labor Department and to counsel for the Government is “irrelevant to certification.” The

Workers have no interest in certification as an end in itself; certification is simply the means to an

end – specifically, the receipt of TAA benefits. If delays in certification operated to effectively

deprive the Workers of benefits, certification would be a pyrrhic victory indeed.

Court No. 04-00229 Page 57

workers suffered through repeated remands of their NAFTA-TAA claims and were eventually

certified by the Labor Department, only to learn that the extended delays resulting from the agency’s

incompetence and intransigence had effectively rendered them ineligible for basic benefits. In all

three cases, the workers ultimately succeeded in receiving at least some of those benefits – but only

after extensive post-certification efforts by their attorneys, who basically “browbeat” the agency into

submission. See generally BMC, 30 CIT at ____ n.63, 454 F. Supp. 2d at 1341 n.63 (and authorities

cited there).

The Workers here note that the Government made the exact same argument in Tyco that it

makes in this action – that is, the Government asserted that time expended by the workers’ counsel

after TAA certification was not compensable under the EAJA. See Pls.’ Application at 27 (citation

omitted).45 But the Tyco court rejected that argument, awarding fees for post-certification work by

counsel, relying on Jenkins v. Missouri, 127 F.3d 709 (8th Cir. 1997). See Tyco, 28 CIT at 1597-98,

350 F. Supp. 2d at 1098-99.

In Jenkins v. Missouri, the court surveyed the range of post-judgment activities that may be

covered by fee-shifting statutes, emphasizing that “monitoring the defendant’s compliance with

court orders and enforcing the remedy are generally compensable as part of the underlying case.”

Jenkins v. Missouri, 127 F.3d at 716-17 (citation omitted).46 The court similarly “stressed the

45

See generally Tyco, 28 CIT at 1583-84, 350 F. Supp. 2d at 1087 (summarizing

Government’s arguments objecting to fees for post-certification work).

46

Of course, the work at issue here is not post-judgment work, but – rather – post-certification

work. That fact only strengthens the Workers’ claim. And, notwithstanding the distinction, cases

analyzing post-judgment work are instructive on the merits of the Government’s challenge in this

action.

Court No. 04-00229 Page 58

importance of allowing the plaintiff . . . fees for successfully defending the remedy against attacks.”

Id. at 717. To the same effect is Norman v. Housing Authority of City of Montgomery, 836 F.2d

1292 (11th Cir. 1988), where the court of appeals reversed the district court’s disallowance of fees

for time expended by counsel in a class action after a consent decree had been entered. As the court

of appeals observed:

The law seeks to compensate attorneys for work reasonably done actually to secure

for clients the benefits to which they are entitled. . . . [T]he order of the court does

not always secure the actual benefit and additional legal work may be required. To

paraphrase the acute observation of baseball great Yogi Berra, a case ain’t over till

it’s over. This means that . . . counsel are entitled to compensation until all benefits

obtained by the litigation are in hand.

Norman, 836 F.2d at 1305 (emphasis added); see generally Pennsylvania v. Delaware Valley

Citizens’ Council for Clean Air, 478 U.S. 546, 558-61 (1986) (discussing compensability of various

monitoring and enforcement activities that could have adversely affected rights under consent

decree).47

The same result obtains here. Indeed, the case for compensability of the challenged hours

in this action is even stronger than in many cases involving post-judgment work, because the time

at issue here was largely expended in direct response to the orders and instructions of the Court.

See, e.g., Powers v. Comm’r of Internal Revenue Service, 43 F.3d 172, 181-82 (5th Cir. 1995)

(concluding that it was abuse of discretion for trial court to deny fees for work that trial court itself

47

See also Northcross v. Bd. of Ed. of Memphis City Schools, 611 F.2d 624, 637 (6th Cir.

1979) (in desegregation case, noting that “[s]ervices devoted to reasonable monitoring of the court’s

decrees, both to insure full compliance and to ensure that the plan is indeed working to desegregate

the school system, are compensable services. They are essential to the long-term success of the

plaintiff’s suit.”); Hirsch & Sheehey, supra, at 28 (noting that “reasonable work at all stages of

litigation is compensable,” including “work in connection with post-judgment or post-decree

administration” and “monitoring”) (citations omitted).

Court No. 04-00229 Page 59

had ordered counsel to do); Miller v. Hotel & Restaurant Employees & Bartenders Union, 107

F.R.D. 231, 243 (N.D. Cal. 1985), rev’d on other grounds, 806 F.2d 1371 (9th Cir. 1986) (awarding

fees for challenged hours, based in part on fact that challenged work was in response to court’s

request).48

Moreover, the Government’s contention that disputes concerning the benefits awarded to

individual workers are reserved for the state courts gives no cause for pause – at least under the

specific circumstances of this case. See Def.’s Response at 28-29, 38-39. As BMC observed:

Even assuming arguendo that the court – in a run-of-the-mill TAA case – lacks the

authority to ‘expressly order[ ], . . . that Plaintiffs, having been certified, are entitled

to receive full TRA benefits, regardless of the date of their certification,’ it is clear

beyond cavil that ‘a court always retains jurisdiction to supervise and administer its

own docket.’

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1348 (quoting Government’s brief first, then Arvinmeritor,

Inc. v. United States, 29 CIT ____, ____, 2005 WL 1958804 at * 1 (2005); other citations omitted).

BMC thus explained that, “to the extent that the time consumed by litigation may operate in any

fashion to limit the effectiveness of any relief that may ultimately be awarded in a TAA case, the

court is duty-bound – particularly in light of the remedial nature of the TAA statute – to expedite

its proceedings, limiting the number and the duration of remands.” BMC, 30 CIT at ____, 454 F.

48

Specifically, Plaintiffs’ Comments on Defendant’s Determination on Remand – like

Defendant’s Response to Plaintiffs’ Comments in Response to Labor’s Remand Determination –

were filed in accordance with the Court’s Remand Order, as well as the Order of October 13, 2004

(which granted the Government’s motion for an extension of time for the filing of the Labor

Department’s remand results, and amended the deadlines for the parties’ related submissions). The

Workers’ letter to the Court dated February 11, 2005 was in response to (and was invited by) the

Court’s letter of a week earlier. Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’ Comments

on Remand Results was filed pursuant to the Order dated February 3, 2005. And, finally, the

Workers’ letter memorandum dated May 19, 2005 was in response to (and was invited by) the

Court’s letter to the parties of May 12, 2005.

Court No. 04-00229 Page 60

Supp. 2d at 1348-49 (footnote omitted).

As BMC observed, whatever the Court’s authority in a run-of-the-mill TAA case may be,49

this was no run-of-the-mill case. To obtain the lengthy extension of time that it sought for the filing

of the Labor Department’s remand results, the Government here expressly warranted to the Workers

and to the Court that, “in the event petitioners are certified in this case, the petitioners would be

entitled to receive full TRA benefits regardless of the date they are certified.” (Emphasis added.)

Thus, as the Workers correctly noted, the issue presented in this case was “whether [the] Court

should exercise its inherent authority to give effect to a representation made by the Government in

a pleading before this Court.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1349 (quotation

omitted).

The Workers emphasized:

Plaintiffs . . . have a reasonable expectation as litigants to have a measure of

reliability in their dealings with the government in this case [– as does the Court –

]. . . . The Government should not have assured Plaintiffs of their entitlement to full

49

Although there is no need to decide the issue here, it is far from clear that the extent of the

benefits available to a group of petitioning workers pursuant to a Labor Department TAA

certification is a matter for the state courts (rather than the Court of International Trade), as the

Government has argued here and in other cases.

The statutory scheme generally contemplates that state courts will resolve disputes

concerning a state’s administration and implementation of a Labor Department group certification

– such as disputes concerning the coverage of a particular individual worker under a Labor

Department group certification, as well as disputes concerning a particular individual worker’s

compliance with preconditions to eligibility for specific types of benefits available under the group

certification. See generally 19 U.S.C. § 2311(d). But issues concerning the overall scope and effect

of the Labor Department’s certification of a group of petitioning workers are a very different matter.

In other words, the issue is not what benefits a particular individual worker will or will not receive

(the administration and implementation of a group certification). Rather, the issue is the scope,

meaning and effectiveness of the group certification itself – for all of the workers potentially

covered by that group certification.

Court No. 04-00229 Page 61

benefits if the Government knew it would ultimately take the position that its

representation (designed to induce an extension [of time]) could not be enforced. In

such a scenario, the Court must have the authority to hold the Government to its

words.

BMC, 454 F. Supp. 2d at 1349 (quoting Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’

Comments on Remand Results, at 2) (emphasis added in BMC).

Under circumstances such as those presented here, the Government cannot possibly contend

that the Court is powerless to hold the Government to its word, or that petitioning workers are

relegated to the state courts to enforce express representations made by the Government to

petitioning workers and to the Court of International Trade, and on which the workers and the Court

have relied in granting the Government relief that it has requested.50 Given the facts of this case,

counsel to the Workers were entirely justified in undertaking efforts to ensure that the Government

kept its word and that the Workers were not deprived of benefits due to the Labor Department’s

delayed certification. The relatively modest amount of time that counsel devoted to those ends is

thus compensable.

50

Fortunately, there was ultimately no need here to test the limits of the Court’s jurisdiction

vis-a-vis that of the state courts. See generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1347

(acknowledging that “the statutory scheme generally vests the state courts with jurisdiction over

disputes concerning the specific TAA benefits to which individual members of a certified group of

former employees are entitled”) (citations omitted). Nor was it ultimately necessary to consider the

need for sanctions, contempt proceedings, or other action against the Government or its counsel.

As noted above, the Workers advised the Court that – armed with the post-certification memoranda

filed by the Government in this action interpreting the complex provisions of the TAA statute and

regulations and confirming that the delay in the Workers’ certification would have no effect on the

benefits to which they were entitled – they no longer foresaw any insurmountable obstacles to their

receipt of the full measure of TAA benefits. See id., 30 CIT at ____, 454 F. Supp. 2d at 1349-50

(citation and footnote omitted).

Court No. 04-00229 Page 62

c. The Sufficiency of Billing Documentation

The Government criticizes certain billing entries in the Workers’ Application as “vague,”

and asserts generally that the hours reflected in those entries should be disallowed. See Def.’s

Response at 32-33. As “example[s],”51 the Government points to entries for time spent on

“telephone calls, e-mails and meetings regarding TAA issues,” “discussions . . . regarding case

management,” and “discussions . . . regarding getting visibility for TAA software cases.” See id.

at 32.52

The Government cites a number of cases in which courts reduced fee awards because billing

records were not sufficiently detailed. See generally Def.’s Response at 29-31.53 But specificity in

51

It is, in general, inappropriate for the Government to merely cite “examples,” and

effectively delegate to the Court the work of analyzing all billing entries line-by-line in an effort to

identify other entries that the Government might find similarly objectionable. See generally sections

II.B & II.B.1, supra. It is particularly inappropriate here, because – quite apart from the trespass on

the Court’s time – the Court cannot know what the Government considers to be unduly “vague.”

Federal judges are not required to be telepathic.

52

As noted in section II.B.1 above, the Government consistently and inexplicably fails to

identify the dates of the billing entries that it quotes, or to cite to the pages of the Workers’

Application where those entries appear.

In any event, review of the Workers’ Application discloses that entries dated July 22, 2004

and July 28, 2004 include time devoted to “telephone calls, e-mails and meetings regarding TAA

issues.” An entry dated July 28, 2004 reports time spent in “discussions . . . regarding case

management.” And an entry dated December 16, 2004 reports time spent on “discussions . . .

regarding getting visibility for TAA software cases.”

53

Contrary to the Government’s intimations, however, inadequate documentation only rarely

results in wholesale denial of a fee application. See Def.’s Response at 29 (arguing that “[a]n

application for EAJA fees may be denied . . . where an applicant provides only vague descriptions

of activities”).

“[T]he recordkeeping requirement should not be imposed in a draconian manner.” Action

on Smoking & Health, 724 F.2d at 220. As a general rule, “deficiencies in documentation [of hours

Court No. 04-00229 Page 63

time-keeping is not an end in itself. Significantly, the Government fails to allege that it was harmed

in any particular way by the alleged lack of detail in the billing records in this case.

It is true that fee applicants are obligated to “maintain billing time records in a manner that

will enable a reviewing court to identify distinct claims,” so that the court may discount a potential

award to adjust for work on claims as to which the fee applicant did not prevail. Hensley v.

Eckerhart, 461 U.S. at 437 (footnote omitted); see also City of Riverside v. Rivera, 477 U.S. at 569

n.4 (discussing Hensley requirement to maintain billing records in manner that permits identification

of distinct claims, to permit court to differentiate between time spent on successful claims versus

unsuccessful claims); Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 180 (4th Cir. 1994)

(emphasizing that specificity in billing records “is especially necessary when [a court] review[s] an

award in a case where the plaintiff has not prevailed on all the claims”) (citation omitted).

But the Government does not allege that, in reviewing the Workers’ Application, it was

unable to distinguish between the time that the Workers’ counsel spent on tasks related to successful

claims and that spent on tasks related to unsuccessful claims. Nor could the Government do so –

because the Workers prevailed on the entirety of their case. Accordingly, there is no need here for

detailed billing records to identify and disallow time spent on unsuccessful claims. See City of

Riverside v. Rivera, 477 U.S. at 569 n.4 (rejecting argument that fee applicant’s time records were

insufficient, emphasizing that “while it is true that some of the disputed time records do not identify

worked] are cause for reduction rather than outright denial of fees.” Id. (citing Hensley v. Eckerhart,

461 U.S. at 436); see also Jordan v. Dep’t of Justice, 691 F.2d 514, 518 (D.C. Cir. 1982) (stating that

“[o]utright denial [of an award of fees] may be justified when the party seeking fees declines to

proffer any substantiation in the form of affidavits, timesheets or the like, or when the application

is grossly or intolerably exaggerated, or manifestly filed in bad faith.”) (citations omitted).

Court No. 04-00229 Page 64

the precise claims worked on at the time, . . . [the] lapse [is] unimportant” since the trial court found

all claims to be interrelated and thus compensable).

Just as some detail in billing records is necessary in cases where – unlike this one – the court

must distinguish between time spent on successful claims and time spent on unsuccessful claims,

so too a certain level of specificity may be needed to allow opposing counsel and the court to

evaluate whether the amount of time that counsel devoted to specific tasks was appropriate. See,

e.g., Naporano Iron and Metal Co., 825 F.2d at 404-05 (emphasizing need under EAJA for

“contemporaneous records of attorney’s time . . . in order to determine the reasonableness of the

charges”; “Only by knowing the specific task performed can the reasonableness of the number of

hours required for any individual item be judged.”); Rode v. Dellarciprete, 892 F.2d at 1190

(holding that “[a] fee petition is required to be specific enough to allow the district court ‘to

determine if the hours claimed are unreasonable for the work performed.’”) (quoting Pawlak v.

Greenawalt, 713 F.2d 972, 978 (3d Cir. 1983)).

But, again, nowhere has the Government claimed that the alleged lack of detail in the billing

records at issue precluded it from assessing the reasonableness of the time that the Workers’ counsel

expended on various tasks.54 Indeed, quite to the contrary, the Government specifically argues that

the Workers’ counsel devoted too much time to at least one task. See generally Def.’s Response at

32 (arguing that “[t]he research engaged in by counsel is . . . excessive”); section II.B.1.e, infra

54

The Government’s Response does state generally that vague descriptions in billing records

“provide no guidance . . . in determining whether attorney time was reasonable and necessary.” See

Def.’s Response at 30. However, that statement appears only as part of a “boilerplate” summary of

certain general principles of law in cases under fee-shifting statutes, which precedes the section of

its brief in which the Government argues this case. See Def.’s Response at 32 (analyzing case at bar,

starting with paragraph beginning “In this case . . . ”).

Court No. 04-00229 Page 65

(addressing Government’s argument that hours spent on legal research should be disallowed). In

short, absent any claim that it suffered some resulting harm, it is unclear that the Government is in

a position to complain about the level of detail in the billing records in this case.

Counsel are “not required to record in great detail how each minute of [their] time was

expended. But at least counsel should identify the general subject matter of [their] time

expenditures.” Hensley v. Eckerhart, 461 U.S. at 437 n.12 (citation omitted). As another court has

put it, “a fee petition should include ‘some fairly definite information as to the hours devoted to

various general activities, e.g., pretrial discovery, settlement negotiations, and the hours spent by

various classes of attorneys, e.g., senior partners, junior partners, associates.” Rode v. Dellarciprete,

892 F.2d at 1190 (quoting Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard

Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973)). “However, ‘it is not necessary to know the exact

number of minutes spent nor the precise activity to which each hour was devoted nor the specific

attainments of each attorney.’” Rode v. Dellarciprete, 892 F.2d at 1190 (quoting Lindy Bros., 487

F.2d at 167; citing Pawlak v. Greenawalt, 713 F.2d at 978).55

To be sure, many of the billing entries in the records submitted by the Workers’ counsel are

55

See generally Davis v. City and County of San Francisco, 976 F.2d at 1542 (rejecting

argument that billing records were insufficiently specific, emphasizing that Supreme Court’s

decision in Hensley requires only that counsel “identify the general subject matter of his time

expenditures”) (quoting Hensley v. Eckerhart, 461 U.S. at 437 n.12); Rode v. Dellarciprete, 892 F.2d

at 1191 & n.13 (rejecting argument that billing entries such as “settlement” and “miscellaneous

research, telephone conversations, and conferences concerning facts, evidence, and witnesses” were

insufficiently specific).

See also In re Synthroid Marketing Litigation, 264 F.3d 712, 722 (7th Cir. 2001) (holding that

level of billing itemization and detail required to support award of costs “is a question for the

market”; “If counsel submit bills with the level of detail that paying clients find satisfactory, a

federal court should not require more.”) (citation omitted).

Court No. 04-00229 Page 66

“hardly paragons of revelation.” See Earth Island Institute v. Christopher, 20 CIT 1221, 1241, 942

F. Supp. 597, 613 (1996), vacated on jurisdictional grounds and remanded sub nom. Earth Island

Institute v. Albright, 147 F.3d 1352 (Fed. Cir. 1998) (characterizing “printout of . . . lawyers’ billing

notes” in that case). However, when read together with both the Administrative Record and the

court docket sheet in this matter, the billing entries at issue provide sufficient information to

conclude that the time that the Workers’ counsel devoted to various tasks was not excessive or

otherwise unreasonable. See generally Dennis v. Chang, 611 F.2d 1302, 1308 (9th Cir. 1980)

(rejecting challenge to adequacy of billing entries, where trial court found information provided to

be sufficient “in light of the court’s intimate knowledge of the proceedings in the case”); Portland

Audubon Society v. Lujan, 865 F. Supp. 1464, 1477 (D. Or. 1994) (rejecting challenge to adequacy

of billing entries, where trial court “reviewed the submissions of the plaintiffs and the record of [the]

case, and . . . [was] familiar with the entire history of [the] litigation”).56

Counsel are cautioned, however, that the Court of Appeals has “reject[ed] unequivocally any

suggestion that [a trial court] ha[s] an obligation to reconstruct . . . bills” for a fee petitioner based

on “the documentation in [the] fee application together with the . . . [court’s] docket sheet,” as the

Court has done here. See Naporano Iron and Metal Co., 825 F.2d at 405 (emphasis added).

Accordingly, those who fail to keep detailed records of their time – describing their work with a

relatively high degree of specificity – do so at their peril. See PPG Indus. v. Celanese Polymer

56

See also Powers v. Comm’r of Internal Revenue Service, 43 F.3d at 181-82 (concluding

that nature of work could be inferred from dates on which hours were expended relative to various

events in litigation, where billing summary failed to provide requisite “description of the work

done”); Tyco, 28 CIT at 1593, 350 F. Supp. 2d at 1095 (disallowing certain hours where, even when

reading billing entries in conjunction with administrative record and court’s docket sheet, court was

nevertheless still unable to determine nature of work claimed).

Court No. 04-00229 Page 67

Specialties Co., 840 F.2d 1565, 1570 (Fed. Cir. 1988) (citation omitted) (“call[ing] attention to the

well-established rule that insufficient documentation may warrant a reduction in the fees”).

d. Fees for Representation by Multiple Attorneys

The Government also challenges the Workers’ claim for fees for “multiple ‘status meetings’

and conversations among three or more attorneys,” charging broadly that “this case was not of the

level of complexity to warrant representation by several attorneys.” See Def.’s Response at 32.

The Government’s reference to “status meetings,” in quotation marks, does little to add

specificity to its argument. The Government fails to identify the dates of any of the billing entries

to which it is referring. Nor does the Government cite to the Worker’s Application – either as to the

“status meetings” or as to the “conversations among three or more attorneys” to which it objects.

As discussed above, where a defendant raises only “a generalized objection” to a category

of fees, the prevailing party typically need not present an entry-by-entry defense of the challenged

claims. Nor in such cases is the court generally obligated to scrutinize the fee claimant’s billing

statement to identify entries potentially at issue, other than those which can be “eliminated through

a cursory examination of the bill.”57 See, e.g., Wooldridge v. Marlene Indus. Corp., 898 F.2d 1169,

57

Although not required to do so, the Court analyzed the Workers’ Application and identified

a total of nine meetings convened to discuss “the status of the case” (or some similar phrasing). By

any measure, that is not an unreasonable number of “status meetings” in a case that was actively

litigated for more than eight months, and in which litigation spanned more than two years.

Scrutiny of the Workers’ Application reveals another seven or so “conversations among three

or more

This text is long and has been trimmed here. Open the source document for the complete record.