The opinion
United States Court of Appeals,
Fifth Circuit.
No. 95-50060.
TEXAS FOOD INDUSTRY ASSOC., National-American Wholesale Grocers'
Assoc./International Foodservice Distributors Assoc., National
Grocers Assoc., Plaintiffs-Appellees,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellant.
April 30, 1996.
Appeal from the United States District Court for the Western
District of Texas.
Before REYNALDO G. GARZA, JOLLY and DUHÉ, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
The National-American Wholesale Grocers'
Association/International Foodservice Distributors Association
("NAWGA") is a national trade association comprised of over 200
wholesale grocery distribution companies, a number of which are
multi-billion dollar corporations. NAWGA prevailed in litigation
against the United States. It now seeks an award of attorneys'
fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. §
2412 et. seq. EAJA limits eligibility for a fee award to entities
based on net worth and number of employees. The sole question
presented by this appeal is whether eligibility of a trade
association for an EAJA award is determined by reference to the
assets and size of the association itself or whether the
association's eligibility additionally hinges on the assets and
size of its constituent members. We conclude that, under the plain
language of the statute, an association's eligibility for a fee
1
award under EAJA § 2412(d)(2)(B) depends only on the association's
net worth and size, and we affirm the district court's award of
attorneys' fees and expenses in the amount of $163,083.75 to NAWGA.
I
NAWGA incurred the attorneys' fees at issue when it and two
other meat and poultry industry trade associations (together, the
"Trade Associations") brought this action on behalf of their
members to delay implementation of an interim final rule
promulgated by the United States Department of Agriculture
("USDA"). The interim rule, which required packages of meat to
contain safe handling and preparation instructions, provided only
for a 30-day, post-rule comment period. USDA solicited no comments
prior to its promulgation of the interim rule.
In the merits phase of this action, the Trade Associations
challenged USDA's failure to comply with the notice and comment
requirements of the Administrative Procedure Act (the "APA"), 5
U.S.C. § 553. In October 1993, the district court entered judgment
for the Trade Associations, finding that USDA violated the APA and
preliminarily enjoining it from enforcing the interim rule. USDA
then issued a proposed rule in conformity with the APA. Following
a full comment period, USDA published a final rule on March 28,
1994, imposing essentially the same labelling requirements. The
Trade Associations then moved to dismiss their action against USDA
as moot. The district court granted dismissal on May 31, 1994.
On June 30, 1994, NAWGA, which financed the APA litigation for
itself and its co-plaintiffs out of its general operating budget,
2
alone applied for attorneys' fees under EAJA, 28 U.S.C. § 2412(d).
It is this phase of the case that is at issue on this appeal. USDA
vigorously contested NAWGA's eligibility for an EAJA award,
contending, among other things, that NAWGA, which employs only 36
full-time employees and has a net worth of approximately $3.3
million, exceeded EAJA's eligibility limitations for net worth and
size. To be eligible for a fee award, an association must employ
no more than 500 employees and have a net worth of not more than $7
million. 28 U.S.C. § 2412(d)(2)(B)(ii). NAWGA was ineligible for
an EAJA award, USDA argued, because § 2412(d)(2)(B)(ii) requires
the aggregation of the net worth and size of a trade associations'
individual members when the association is representing primarily
the members' interests in litigation. USDA also argued that NAWGA
is ineligible for a fee award because the individual ineligible
members of the Trade Associations would receive a "free ride" if
the costs of the APA litigation is paid for under EAJA.
The district court rejected USDA's aggregation and "free
rider" arguments and awarded NAWGA fees and expenses in the amount
of $163,083.75. USDA filed a timely notice of appeal from the EAJA
award on the question of NAWGA's eligibility for fees.
II
We review the conclusions of law underlying a denial of
attorneys' fees de novo. Perales v. Casillas, 950 F.2d 1066, 1072
(5th Cir.1992). Because EAJA is a partial waiver of sovereign
immunity, it must be strictly construed in the government's favor.
Ardestani v. INS, 502 U.S. 129, 137, 112 S.Ct. 515, 520-21, 116
3
L.Ed.2d 496 (1991); Perales, 950 F.2d at 1076.
Whether the aggregation of the net worth and size of an
association's members is required when determining the
association's eligibility for a fee award is a question of the
proper interpretation of § 2412(d)(2)(B)(ii).1 A prevailing party
is eligible for fees and expenses only if he meets the statutory
definition of a party:
(d)(2) For purposes of this subsection—
(B) "party" means ... (ii) any owner of an unincorporated
business, or any partnership, corporation, association,
unit of local government, or organization, the net worth
of which did not exceed $7,000,000 at the time the civil
action was filed, and which had not more than 500
employees at the time the civil action was filed; except
that an organization described in section 501(c)(3) of
the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3))
exempt from taxation under section 501(a) of such Code,
or a cooperative association as defined in section 15(a)
of Agricultural Marketing Act (12 U.S.C. 1141(j)(a)), may
be a party regardless of the net worth of such
organization or cooperative association * * *.
28 U.S.C. § 2412(d)(2) (emphasis added).
NAWGA urges us to accept the district court's construction of
§ 2412(d)(2) that a prevailing association is a "party" if it meets
the provision's bright-line rule for eligibility, and nothing more.
1
The circuit courts have divided on the issue of
aggregation. The United States Court of Appeals for the Sixth
Circuit, in National Truck Equipment Association v. National
Highway Traffic Safety Administration, ruled that aggregation is
appropriate where an association's members received significant
benefits from affiliating with the association in the litigation.
972 F.2d 669 (6th Cir.1992). In contrast, the United States
Court of Appeals for the Ninth Circuit, in Love v. Reilly, held
that where an association is a legitimate party with standing in
litigation, the fact that an ineligible constituent member
benefitted from the litigation does not preclude an EAJA fee
award to the association. 924 F.2d 1492, 1494 (9th Cir.1991).
4
Although USDA concedes that "neither the language of the statute
nor the legislative history explicitly directs aggregation of the
net worth and number of employees of an association's members," it
nevertheless contends that structure of § 2412(d)(2)(B) betrays an
implicit aggregation requirement that is applicable here.
As support for its construction, USDA points out that §
2412(d)(2) explicitly exempts agricultural cooperatives and
non-profit organizations from EAJA's net worth limit.2 Citing
Senator DeConcini's post-enactment explanation of the provision,3
USDA characterizes this treatment of agricultural cooperatives and
non-profits as a waiver of the statute's "implicit net worth
aggregation requirement." From these "exceptions"4 and the
statutory canon expressio unius est exclusio, USDA concludes that
2
Because of this carve out, non-profits and agricultural
cooperatives qualify for an EAJA fee award even if their net
assets exceed $7 million.
3
Senator DeConcini remarked that:
In the West, and I suspect in other parts of the
country, small farmers often band together to form
agricultural cooperatives. They have often been
considered as a unit particularly in determining their
assets for insurance and borrowing purposes. Such
aggregate treatment would cause the whole cooperative
to exceed the [then] $5 million limitation.
Reauthorization of EAJA, Hearing Before the Subcomm. on
Administrative Practice and Procedure of the Senate Comm. on
the Judiciary, 98th Cong., 1st Sess. 17 (April 14, 1983).
4
USDA also notes that Congress has clarified the definition
of "party" since enacting EAJA, to express its intent that a
local labor union's "entitlement to fees should be determined
without regard to the assets and/or employees of the
international union with which the local is affiliated."
H.R.Rep. No. 99-120, 99th Cong., 1st Sess. at 17., reprinted in
1985 U.S.S.C.A.N. 132, 146.
5
"§ 2412(d)(2)(B)(ii) should be construed to exempt from the
aggregation requirement only the ... types of associations
specifically referred to by Congress, and no others."
We examine first the language and structure of EAJA to
determine the proper meaning of the term "party." Section 2412(d)
provides that attorneys' fees shall be awarded to prevailing
parties and explicitly includes in the definition of a party any
"association, ... the net worth of which did not exceed $7,000,000
at the time the civil action was filed, and which had not more than
500 employees at the time the civil action was filed." §
2412(d)(2)(B). This language is clear and unambiguous. Nowhere
does it limit EAJA's application only to associations whose members
individually are eligible for EAJA fees. Instead, it imposes a
ceiling only on the net worth and size of the association itself.
It was open to Congress to include additional limitations on
eligibility, such as the aggregation rule that USDA advocates, but
Congress did not do so.
We are unpersuaded, moreover, that EAJA's special eligibility
rule for agricultural cooperatives and non-profit organizations is
evidence of an implicit aggregation rule. Neither the statute nor
its legislative history suggest that the special eligibility rule
for agricultural cooperatives and non-profits was motivated by
concerns about ineligibility resulting from the aggregation of
employees and assets.5 Indeed, this rule does not even address the
5
Congress may have been motivated by its desire to preserve
the assets of non-profits for charitable purposes and to maintain
the assets of cooperatives for use in farmer cooperative
6
subject of "aggregation"; instead, it allows a single agricultural
cooperative or a single nonprofit organization to qualify for an
EAJA fee award regardless of the singular net worth of that
entity.6
Neither are we persuaded, on the basis of Senator DeConcini's
statement, that this special eligibility rule is to be construed as
a waiver of some implicit aggregation requirement. As the Supreme
Court has made clear, post-enactment legislative history does not
control a statute's interpretation. Pierce v. Underwood, 487 U.S.
552, 566, 108 S.Ct. 2541, 2550-51, 101 L.Ed.2d 490 (1988). In sum,
we are unable to discern in the unadorned words of § 2142(d)(2)(B)
an unwritten aggregation requirement. As we have stressed
repeatedly, we must "presume that a legislature says in a statute
what it means and means in a statute what it says." U.S. v. Meeks,
69 F.3d 742, 744 (5th Cir.1995) (citing Connecticut Nat'l Bank v.
Germain, 503 U.S. 249, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992)).
Notwithstanding this cardinal canon of statutory
ventures, however the net worth of these entities might be
calculated. See Gregory C. Sisk, The Essentials of the Equal
Access to Justice Act: Court Awards of Attorney's Fees for
Unreasonable Government Conduct, 55 La.L.Rev. 217, 360 (1995).
6
Significantly, the proof of aggregation that USDA offers
does not support the particular aggregation rule it advances: to
determine an association's EAJA eligibility, the net worth and
number of employees of an association's constituent members are
aggregated; an association is ineligible for EAJA fees if either
aggregate figure exceeds the statutory limitations. Section
2412(d)(2), however, excepts agricultural cooperatives and
tax-exempt organizations only from the net worth ceiling, not the
employment size limitation. Clearly, this limited exception
cannot support an implicit rule requiring the aggregation of
employees and assets.
7
construction—that the words of a statute will be given their plain
meaning absent ambiguity—USDA contends that an implicit aggregation
rule also is necessary in order to avoid a result "that is plainly
at variance with the policy of the legislation as a whole."
Congress intended in EAJA, USDA argues, to reduce the financial
deterrent only to small entities in litigating against the United
States; it did not intend fee awards to extend to associations
like NAWGA, whose membership includes multi-billion dollar
corporations that have bountiful coffers from which to pay
attorneys' fees. Such an "absurd result" is avoided, USDA
maintains, by recognizing an implicit aggregation rule.
Because we think that judicial inquiry into the applicability
of § 2414(d)(2)(B) must begin and must end with § 2414(d)(2)(B)'s
clear and unambiguous words, we also reject USDA's contention that
aggregation will effect Congress' intent. The statute's purpose,
by its plain language, is to make associations eligible for an
award on the basis of each association's independent
qualifications—not the qualifications of its constituent members.
Congress surely understood that "associations" are made up of
constituent members, some more wealthy and larger than others, yet
who have joined together to further a common business purpose. It
is not implausible that Congress would think it appropriate to
treat associations qua associations instead of atomizing the body
politic of each association, then inspecting and distinguishing
each component member to determine whether each is individually
eligible. Neither is it inconceivable that Congress envisioned an
8
association as the only viable vehicle for certain small businesses
to prosecute their claims against the United States. In order to
deny the benefits of an EAJA award to an association's wealthy,
ineligible members, USDA would have us unfairly exclude from EAJA's
clear reach an association's eligible members.
USDA also fails to recognize that any implicit aggregation
rule may well have application to entities other than associations.
Section 2412(d)(2) lists as eligible parties the owners of
unincorporated businesses, as well as partnerships, corporations,
and units of local government. Although we expressly do not pass
on the question, we find it unlikely that Congress intended an
implicit aggregation rule to apply to these entities. Congress,
for example, presumably did not intend that the courts determine a
corporation's eligibility for a fee award by reference to the
assets and employees of the corporation's individual shareholders.
In sum, we believe that the statute's plain language provides
no basis for the aggregation requirement that the government would
have us engraft.7 Accordingly, we AFFIRM the district court's
7
We also reject USDA's related argument that NAWGA is
ineligible for a fee award because NAWGA's members received a
"free ride" in the APA litigation. In State of Louisiana, Ex.
Rel. Guste v. Lee, we held that in special circumstances,
participation in litigation by an eligible party may make an EAJA
award for other eligible parties unjust. 853 F.2d 1219, 1225
(5th Cir.1988). This is so where the claimant for attorneys'
fees is an eligible party who takes a "free ride" through
litigation by joining an ineligible party who is "fully willing
and able to prosecute the action against the United States." Id.
In contrast, we concluded that "if the ineligible party's
participation is nominal or narrow, then the eligible parties
should not be denied the access that Congress sought to ensure by
enacting the EAJA." Id.
9
award of EAJA fees to NAWGA in the amount of $163,083.75.
AFFIRMED.
REYNALDO G. GARZA, Circuit Judge, dissenting:
The majority would allow a trade association representing
billion dollar corporations to receive an award of attorneys' fees
under the Equal Access to Justice Act ("EAJA"). Because such a
ruling ignores the intent of Congress to lessen the burden for
small economic entities to seek review of or defend against
unreasonable governmental actions, I respectfully dissent.
The majority relies on a plain-meaning approach to conclude
that the National-American Wholesale Grocers'
Association/International Foodservice Distributors Association
("NAWGA") has met the eligibility requirements for attorneys' fees
under EAJA, 28 U.S.C. § 2412(d)(2)(B)(ii). NAWGA was a prevailing
party against the government, had a net worth less than $7 million
and fewer than 500 employees, and funded the litigation. At first
glimpse, NAWGA apparently qualifies for an award. I agree with the
majority that the text is paramount but I also agree with them that
when strict adherence to the words of a statute "[leads] to absurd
or futile results," the Court should "look[ ] beyond the words to
the purpose of the act." United States v. American Trucking
Associations, 310 U.S. 534, 543, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345
(1940) (footnote omitted). Even "when the plain meaning [does] not
As USDA concedes, the "free-rider" analysis in Guste is
limited to suits prosecuted against the United States by
co-plaintiffs who both are eligible and ineligible,
respectively, for EAJA fees, a situation not present here.
10
produce absurd results but merely an unreasonable one "plainly at
variance with the policy of the legislation as a whole,' " the
Court should "follow[ ] the purpose rather than the literal words."
Id.
This Court should construe the language of EAJA to "give
effect to the intent of Congress." Id. at 542, 60 S.Ct. at 1063
(footnote omitted). We should avoid an interpretation that
violates the intent of Congress to open the court to small economic
entities in litigation with the government.1 Considering the text
and purpose, I believe that an award to NAWGA, which is clearly
acting on behalf of its megalithic members, is an unreasonable
and/or absurd result. In support of my assertion, I would adopt
the reasoning and result of a Sixth Circuit decision, National
Truck Equip. v. National Hwy. Safety Admin., 972 F.2d 669, 673-674
(6th Cir.1992), which considered the problem currently before this
panel.
In National Truck Equip., an association of truck part
manufacturers had successfully overturned an agency safety rule on
procedural grounds and requested fees under EAJA. Id. at 670. The
Sixth Circuit concluded that aggregation of the net worth and
number of employees of trade association members is required when
1
NAWGA has admitted on appeal that its members include
Supervalu Inc. ($12.57 billion in revenues and 42,000 employees),
Fleming Companies, Inc. (sales of $12.93 billion and 22,900
employees), SYSCO Corp. ($8.9 billion and 23,000 employees), and
Kraft Foodservice, Inc. (sales of $120 million and 300
employees). See Standard and Poor's Register of Corporations,
Directors, and Executives 1994 (covering 1993, the pertinent
year).
11
those associations are primarily representing the interests of
their members. Id. at 673. The truck parts association was not
entitled to fees because the aggregate net worth and number of
employees of its members exceeded the eligibility standards. Id.
Examining the text of EAJA, the Sixth Circuit noted that
Congress specifically exempted three types of associations from the
net worth requirement (agricultural cooperatives, non-profit
organizations and certain local unions). Id. at 673-674. The
exemptions chosen suggest that Congress was aware that aggregation
could render these types of organizations ineligible.2 Congress
made a policy choice to exempt them from the net worth requirement.
While these exemptions do not use the word "aggregation,"
legislative history is informative.
2
In 1985, Congress clarified the definition of "party" as it
applies to "associations" in § 2412(d)(2)(B)(ii) to exempt
certain local unions from the net worth requirement if they are
separate from their international union affiliates by law.
H.R.Rep. No. 99-120, 99th Cong., 1st Sess. at 17, reprinted in
1985 U.S.C.C.A.N. 132, 146. The House Committee's statement on
this provision supports an aggregation requirement:
It is the Committee's intent that if the local union is
to be considered to be a separate labor organization
for purposes of the Labor Management Reporting and
Disclosure Act of 1959, it should be considered to be a
separate organization for purposes of EAJA as well, and
the local's entitlement of fees should be determined
without regard to the assets and/or employees of the
international union with which the local is affiliated.
Id. Why create an exemption here if the district court is
to look merely at a discrete association without considering
that association's affiliation. NAWGA is in a similar
position to the local union with regard to NAWGA members.
NAWGA is its members when it acts solely in their interest.
Those members' net worth and number of employees should be
considered in that situation when determining eligibility.
12
Senator DeConcini explained the exemption for agricultural
cooperatives in the following way:
In the West, and I suspect in other parts of the country,
small farmers often band together to form agricultural
cooperatives. They have often been considered as a unit
particularly in determining their assets for insurance and
borrowing purposes. Such aggregate treatment would cause the
whole cooperative to exceed the [then] $5 million limitation.
Reauthorization of EAJA, Hearing Before the Subcomm. on
Administrative Practice and Procedure of the Senate Comm. on the
Judiciary, 98th Cong., 1st Sess. 17 (April 14, 1983) (emphasis
added). While the majority dismisses this piece of legislative
history, the Senator's comment seems to indicate that the net worth
of association members should be aggregated unless that type of
organization is exempted.3
An association such as NAWGA functions like an agricultural
cooperative whose members join in common economic efforts.
However, Congress provided these cooperatives with exemption from
net worth limits to avoid aggregation. Because Congress created
waivers expressly for certain groups, we can properly presume that
Congress did not intend to exempt all associations from the net
worth aggregation requirement; expressio unius est exclusio
alterius. Leatherman v. Tarrant County Narcotics Intelligence &
Coordination Unit, 507 U.S. 163, 167-68, 113 S.Ct. 1160, 1163, 122
L.Ed.2d 517 (1993). Congress must thus have intended aggregation
3
The analysis in this dissent is limited to aggregation as
it would apply to associations. Whether other entities would be
affected by an aggregation rule is not before us, as noted by the
majority.
13
of net worth for other associations.4 National Truck Equip., 972
F.2d at 674. Presumably, aggregation would still apply to the
employee number limit since none of the entities listed in EAJA
were granted exemption from that limit.
Supporting the above conclusions are the Model Rules adopted
by the Administrative Conference of the United States, applicable
in agency adjudications, which interpret virtually identical
language to that in 28 U.S.C. § 2412(d)(2)(B). See 5 U.S.C. §
504(b)(1)(B) (costs and fees awards in administrative
adjudications). Model Rule 0.104(f) states in part: "The net
worth and number of employees of the applicant and all of its
affiliates shall be aggregated to determine eligibility."
(emphasis added). The commentary to the rule explains that "[t]he
intent of Congress in passing the EAJA was to aid truly small
entities rather than those that are part of a larger group of
affiliated firms." Administrative Conference of the United States,
Equal Access to Justice Act: Agency Implementation, 46 Fed.Reg.
32900, 32903 (1981).
Model Rule 0.104(g) states: "An applicant that participates
in a proceeding primarily on behalf of one or more persons or
entities that would be ineligible is not itself eligible for an
award." 46 Fed.Reg. 32900, 32912 (emphasis added). The commentary
to this rule addresses the issue of trade associations as follows:
4
Even if the agricultural exemption were insufficient to
establish by implication a statutory aggregation rule, at the
very least it creates an ambiguity, allowing this Court to
consider the policy and purpose of EAJA. The purpose of EAJA is
served by an aggregation rule.
14
Trade associations may sometimes become involved in litigation
on their own account (e.g., as employers) as well as in the
interests of their own membership. On reflection, we believe
the best way of handling this situation is through the
provision on participation on behalf of others. When a
proceeding involves a trade association independent of its own
membership, the association's eligibility should be measured
individually like any other applicant's; when an association
is representing primarily the interests of its members, the
agency can examine the facts of the particular situation."
46 Fed.Reg. at 32903.
The Model Rules and commentary discussed above reflect the
policy of the statute. One can hardly dispute that the purpose of
the Equal Access to Justice Act was "to ease the burden upon small
businesses of engaging in litigation with the federal government."
Unification Church v. INS, 762 F.2d 1077, 1082 (D.C.Cir.1985). As
the Eighth Circuit noted, "EAJA awards should be available where
the burden of attorneys' fees would have deterred the litigation
challenging the government's actions, but not where no such
deterrence exists." SEC v. Comserv, 908 F.2d 1407, 1415-1416 (8th
Cir.1990). See also Pub.L. No. 96-481, § 202, 94 Stat. 2325 (1980)
("It is the purpose of this title—to diminish the deterrent effect
of seeking review of, or defending against, governmental action by
providing in specified situations an award of attorney fees ...
against the United States.").
Congress was not likely concerned that a trade association
wholly financed by its large corporate members would be deterred
from litigation. EAJA reveals Congress's "desire not to subsidize
... the purchase of legal services by large entities easily able to
afford legal services." Unification Church, 762 F.2d at 1083.
Under the logic of the majority, any large industrial group
15
(petroleum, automobile manufacturing, etc ...) could set up and
fund an association separate from itself that would readily meet
EAJA's limits on net worth and employees even though its individual
members or members in the aggregate would not. EAJA was not
intended to fund the litigation of corporate Goliaths in the
costume of David.
We thus are not compelled to reach the result advocated by the
majority. Based on statutory analysis, reference to legislative
policy, and commentary in an identical provision in the
Administrative Conference Model Rules, I would hold that awarding
EAJA fees to NAWGA was improper without consideration of NAWGA's
members' net worth and number of employees. As the Sixth Circuit
stated in Nat'l Truck Equip.,
When businesses have the economic power to pursue litigation
against the government without being deterred by the costs,
the congressional purposes of the EAJA are undermined by an
award to those businesses. The same result occurs when a
trade association's membership also contains a number of
companies who can readily afford the costs to protect their
own interests.
972 F.2d at 674.
I would reverse and remand for the district court to determine
whether NAWGA primarily represents its own interests or those of
its members. If NAWGA is primarily representing the interests of
its members, the district court should then aggregate the net worth
and employees of those members to determine the association's
eligibility. Given that NAWGA has conceded that it has at least
one ineligible member, I suspect that NAWGA would be ineligible for
16
fees.5
5
I disagree with the majority that aggregation would be
unfair to eligible members of an association. What financial
deterrent exists for a trade group when the members' combined net
worth exceeds $7 million or when that group has members with
billions in assets? Such a group is likely both willing and able
to defend itself against government actions absent EAJA fee
awards.
17