Petition for Writ of Certiorari — New York State Department of Transportation v. Sierra Club
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SAN 22 1988
85-1263
POs stan ‘ | JOSEPH F. SPANICL, ei
IN THE
Supreme Court of the United Siates
OCTOBER TERM, 1985
>
NEW YORK STATE DEPARTMENT OF TRANSPORTATION,
Petitioner,
page
SIERRA CLUB, THE CITY CLUB OF NEW YORK, NYC CLEAN
AIR CAMPAIGN, INC., and HUDSON RIVER FISHERMEN’S
ASSOCIATION,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
SECOND CIRCUIT
PAUL J. CURRAN
Counsel of Record
BRUCE MARGOLIUS
LAURI A. NOVICK
KAYE, SCHOLER, FIERMAN,
HAYS & HANDLER
425 Park Avenue
New York, New York 10022
(212) 407-8000
Attorneys for Petitioner
QUESTIONS PRESENTED
1. Whether an award of attorneys’ fees against New York
State based entirely upon the common law “bad faith” excep-
tion to the American Rule violates the Eleventh Amendment
prohibition of awards of money damages against states.
2. Whether the affirmance, by the Second Circuit, of an
award of common law “bad faith” attorneys’ fees against New
York State demonstrates an intolerable conflict between that
Court and other Courts of Appeals.
STATEMENT PURSUANT TO SUPREME COURT
RULES 21 and 28.1
The following parties may have an interest in the outcome of
this proceeding:
Sierra Club
The City Club of New York
Business for Mass Transit, Inc.
NYC Clean Air Campaign, Inc.
West 12th Street Block Association
Hudson River Fishermen’s Association
Hudson County Citizens for Clean Air
Seymour Durst
Otis Burger
Mary Rowe
Howard Singer
United States Army Corps of Engineers
Federal Highway Administration
Attorneys for the above parties and the Solicitor General of the
United States have been served with copies of this petition.
TABLE OF CONTENTS
PAGE
WweothINs PRESENTED........................
STATEMENT PURSUANT TO SUPREME COURT
oc. ck sce cn naccicese..., i
er rrr il
Beemer eee PRJEOTOPMITIES.,....................... \
EN cick cnc cn ccc vccena, I
ok vn bck ceacnce 2
CONSTITUTIONAL PROVISIONS AND STATUTES
li. ov accnce., 2
Dememmenms Or THE CASE...................... 2
REASONS FOR GRANTING THE WRIT........... 4
PRELIMINARY STATEMENT:
CERTIORARI SHOULD BE GRANTED TO RE-
SOLVE THE CONFLICT AMONG THE COURTS
OF APPEALS AS TO WHETHER THE ELEVENTH
AMENDMENT BARS AN AWARD OF “BAD
FAITH” ATTORNEYS’ FEES AGAINST A STATE +
l. IN. THE ABSENCE OF AN EXPLICIT
WAIVER, THE ELEVENTH AMENDMENT
ABSOLUTELY BARS AWARDS OF MONEY
PAGE
ll. “BAD FAITH” ATTORNEYS’ FEES ARE
BARRED BY THE ELEVENTH AMENDMENT 7
Il. THE CONFLICT AMONG THE CIRCUITS
MAY ONLY BE RESOLVED BY THIS COURT 8
as. wo). + . nearer ree te ee oe 12
TABLE OF AUTHORITIES
Cases PAGE
Action for Rational Transit v. Westside Highway Pro-
Jatt, 350 ©. Same. 1225 GB... BSGRD oo cvcncvcas 2
Alveska Pipeline Service Co. v. Wilderness Society, 421
a Rr er rire reer ML
Atascadero State Hospital v. Scanlon, Nhe
Se a Moy PO COME kk oh hw ce eek ees in een Oeees 6,8
Bond v. Stanton, 528 F.2d 688 (7th Cir. ), vacated and
vemmnmed, 429 U.S. F7S CISTGD. oon cv icc ckacenns 8
County of Oneida v. Oneida Indian Nation, ____ U.S.
aaa WUE es le REED I a 9 bh bok k oan gaan 11
Edelman v. Jordan, 415 U.S. 651 (1974)............. passim
Fitzpatrick v. Bitzer, 427 U.S. 445 (1976)............. 6
Ford Motor Co. v. Department of Treasury of Indiana,
SAE Gh. GPO AOE a RRA AR KK EKER age eee 6
Gagne v. Maher, 594 F.2d 336 (2d Cir. 1979), aff'd on
other grounds, 448 U.S. 122 (1980)................ 10
Great Northern Life Insurance Co. vy. Read, 322 U.S. 47
| Ae ere eS ere pre ree Nutr I 4
Green v. Mansour, ____ U.S. ___, 106 S. Ct. 423 (1985) 5
Hallmark Clinic vy. North Carolina Department of
Human Resources, 519 F.2d 1315 (4th Cir. 1975) ....7, 8,9
Frans Vv. Louisiane, 134 U.S. 1 (BGO)... oc. cn we cc nae 4
Huecker v. Milburn, 538 F.2d 1241 (6th Cir. 1976). .... 7
Hutto v. Finney, 437 U.S. 678 (1978) ............... 6, 9, 10
Jordan v. Gilligan, 500 F.2d 701 (6th Cir. 1974), cert.
ened, 420 Ti. GOR Tere 66k.0 cide cateeecee (ee
Vi
Maher v. Gagne, 448 U.S. 122 (1980)................ 11
Murgia v. Commonwealth of Massachusetts Board of
Retirement, 386 F. Supp. 179 (D. Mass. 1974), sum-
CA ORR oe 2) es, Gere 7
Penshurst State School & Hospital v. Halderman, 465
I op is can bain sou kA RE RAK AAA CRON 5, 6, 11
Quern v. Jordan, 440 U.S. 332 (1979) ............. 6, 10, 11
\
Sierra Club vy. United States Army Corps of Engineers,
ee ne Oe a OE. cio eke kes teaaua can 1, 3,4, 8
Sierra Club v. United States Army Corps of Engineers,
one +. Seo. 1S0P (B.D.LN.Y, FBR) on icc cc scccscaes l
Sierra Club vy. United States Army Corps of Engineers,
ey EDT Cavite Wr BIOED. Gu cues aca ceceses 2
Sims v. Amos, 340 F. Supp. 691 (M.D. Ala.), summarily
og a Bc» | eee ee ee ae 10, 11
Souza v. Southworth, 564 F.2d 609 (Ist Cir. 1977) ..... )
Souza v. Travisono, 512 F.2d 1137 (ist Cir.), vacated and
Ue 00. MU CO UTOD, «ssa au cAk es cub ua sss 8,9
Tavior v. Perini, 503 F.2d 899 (6th Cir. 1974), vacated on
ge a RO 2 1 er 7
Thonen v. Jenkins, 517 F.2d 3 (4th Cir. 1975) ......... 8,9
United States vy. Washington, 66 F.R.D. 477 (W.D.
i ee oe heh Eb ew aaa ATOR 7
Woolfolk v. Brown, 358 F. Supp. $24 (E.D. Va. 1973),
aff'd in part and rev’d in part, 538 F.2d 598 (4th Cir.
CROC RC Ohta eee kwh alk tea kk kee RUN KS 58% 5 7
PAGE
Constitution
eit a I OE C52 Ge EN w kas eh swe nance ak passim
Statute
Civil Rights Attorney's Fees Awards Act,
a ss ee Ue CUP a KN 5055506 oka Rice eaeeene 9, 10
IN THI
Supreme Court of the United States
OcTOBER TERM, TYSS
No.
-
NEW YORK STATE DEPARTMENT OF TRANSPORTATION,
Petitioner.
—against—
SIERRA CLUB, THE CITY CLUB OF NEW YORK, NYC CLEAN
AIR CAMPAIGN, INC. and HUDSON RIVER FISHERMEN’S
ASSOCIATION,
Respondents.
PETITION FOR AWRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
SECOND CIRCUIT
OPINIONS BELOW
This petition for a writ of certiorari seeks review by this
Court of a judgment and opinion of the United States Court of
Appeals for the Second Circuit dated October 28, 1985, Sierra
Club v. United States Army Corps of Engineers, 776 F.2d 383
(2d Cir. 1985) (attached hereto as Appendix A) (A 1) affirming
in part and reversing in part a judgment of the United States
District Court for the Southern District of New York dated
July 19, 1984, based upon an opinion reported as Sierra Club
v. United States Army Corps of Engineers, 590 F. Supp. 1509
(S.D.N.Y. 1984). Such opinion and judgment are attached
hereto as Appendices B (A 19) and C (A $3).
ty
JURISDICTION
The judgment of the Court of Appeals to which this petition
is addressed was entered October 28, 1985. The jurisdiction of
this Court is invoked pursuant to 28 U.S.C. 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The only such provision involved is the Eleventh Amend-
ment to the Constitution of the United States, which provides
that:
“The Judicial power of the United States shall not be
construed to extend to any suit in law or equity com-
menced or prosecuted against one of the United States by
Citizens of another State or by Citizens or Subjects of any
Foreign State.”
STATEMENT OF THE CASE
This petition arises as the result of a “bad faith” attorneys’
fee award against the New York State Department of Transpor-
tation (“New York State”) in connection with litigation con-
cerning “Westway,” a proposed highway to have been built on
the lower west side of Manhattan. |
The fee award against New York State is based solely upon
the district court’s finding that. before and during two 1982
trials, New York State had acted in bad faith.
Plaintiffs, in the 1982 trials, challenged the Westway project
on a variety of grounds. The district court found for the
I Such litigation involved two trials during 1982, the results of which
are reported in Action for Rational Transit v. Westside Highway
Project, $36 F. Supp. 1225 (S.D.N.Y. 1982) and Sierra Club sv. United
States Army Corps of Engineers, 541 fF. Supp. 1367 (S.D.N.Y. 1982).
plaintiffs solely on the ground that the Environmental Impact
Statement inadequately disclosed the possible impact of
Westway on Hudson River striped bass. After the matter was
remanded to the United States Army Corps of Engineers, a
Supplemental Environmental Impact Statement was published
and challenged at a trial in 1985. That trial, which resulted in a
further injunction against construction of Westway, is not the
subject of this petition.
The fee award was the product of an application by four of
the eleven plaintiffs at the 1982 trials. Such application was
granted under the common law “bad faith” exception to the
American Rule that parties ordinarily bear their own attorneys’
fees. Alveska Pipeline Service Co. v. Wilderness Society, 421
U.S. 240, 269 (1975). There was no statutory basis for the
award.
New York State argued, both in the district court and the
Court of Appeals, that it was immune from an award of “bad
faith” attorneys’ fees by virtue of the Eleventh Amendment.
The Court of Appeals, though noting that “other circuits are
split on this issue,” held that the Eleventh Amendment is not a
bar to such an award and affirmed the district court’s judg-
ment on this issue. 776 F.2d at 388 (A 7-8).
to
Several parties were added as plaintiffs and some deleted between
1982 and 1988.
REASONS FOR GRANTING THE WRIT
PRELIMINARY STATEMENT:
CERTIORARI SHOULD BE GRANTED TO RESOLVE
THE CONFLICT AMONG THE COURTS OF APPEALS
AS TO WHETHER THE ELEVENTH AMENDMENT
BARS AN AWARD OF “BAD FAITH” ATTORNEYS’
FEES AGAINST A STATE
The Eleventh Amendment bars suits for damages brought in
federal courts against an unconsenting state by its own citizens
as well as by citizens of another state. Great Northern Life
Insurance Co. v. Read, 322 U.S. 47 (1944); Hans v. Louisiana,
134 U.S. 1 (1890). This rule was reaffirmed in Edelman v.
Jordan, 415 U.S. 651 (1974), where this Court held that the
Eleventh Amendment bars any award that is “measured in
terms of a monetary loss resulting from a past breach of a legal
duty on the part of the defendant state officials.” /d. at 668.
Edelman holds that a state may be sued in federal court for
injunctive relief to remedy violations of federal law but, absent
express waiver, not for damages. /d. at 664. The Second
Circuit, however, has held that certain forms of damages, such
as attorneys’ fees, are “ancillary” to injunctive relief and,
therefore, not prohibited by Edelman. Sierra Club v. United
States Army Corps of Engineers, 776 F.2d 383, 388-89 (A 7-8).
As demonstrated below, this holding rests on a distorted
perception of the meaning of “ancillary.” Other Courts of
Appeals, however, following Ede/man, have held that such fee
awards constitute damages and that the Eleventh Amendment
bars them. See pp. 7-8 infra.
This petition for a writ of certiorari should, therefore, be
granted to resolve this conflict among the Circuits.
I. IN THE ABSENCE OF AN EXPLICIT WAIVER, THE
ELEVENTH AMENDMENT ABSOLUTELY BARS
AWARDS OF MONEY DAMAGES AGAINST STATES
In Edelman vy. Jordan, 415 U.S. 651 (1974), plaintiffs
successfully challenged the manner in which the State of
Illinois administered the federal-state programs of Aid to the
Aged, Blind, or Disabled (“AABD”). The district court
entered an injunction governing the future administration of
the AABD program and also rendered a money judgment for
retroactive AABD benefits improperly denied plaintiffs. Such
award was made as a part of an injunctive decree, and the
Court of Appeals for the Seventh Circuit affirmed it, describ-
ing it as a form of “equitable restitution.” This Court, how-
ever, held that the award was defective because
“fijt requires payment of state funds, not as a necessary
consequence of compliance in the future with a substan-
tive federal question determination, but as a form of
compensation. . . .” /d. at 668.
Indeed, in language that plainly applies to the present case,
this Court recently stated that “compensatory or deterrence
interests are insufficient to overcome the dictates of the
Eleventh Amendment.” Green v. Mansour, _— U.S. 4
106 S. Ct. 423, 426 (1985) (emphasis added). This Court, then,
has consistently reaffirmed the important doctrine of state
sovereign immunity and the vital role it plays in our federal
system.
The significance of the Eleventh Amendment “lies in its
affirmation that the fundamental principle of sovereign immu-
nity limits the grant of judicial authority in Art. III.” Penn-
hurst State School & Hospital v. Halderman, 465 U.S. 89, 98
(1984). The Eleventh Amendment declares a jurisdictional
policy and “sets forth an explicit limitation on federal judicial
power of such compelling force” that any encroachment on the
scope of the Amendment must be examined with the highest
degree of judicial scrutiny. See Ford Motor Co. v. Department
of Treasury of Indiana, 323 U.S. 459, 467 (1945).
There are certain well established exceptions to the reach of
the Eleventh Amendment. A state may waive its immunity or
Congress, in exercising its Fourteenth Amendment powers,
may override the States’ immunity. Yet, “because the Eleventh
Amendment implicates the fundamental constitutional balance
between the Federal Government and the States,” the test for
determining whether these conditions have been met is a
stringent one. Atascadero State Hospital v. Scanlon, U.S.
___, 105 S. Ct. 3142, 3145-47 (1985). To constitute a waiver of
Eleventh Amendment immunity, a state statute or constitu-
tional provision must specify the state’s intention to subject
itself to suit in federal court, and to establish a valid congres-
sional override, Congress must make its intention unmistak-
ably clear in the language of the statute. /d. at 3147; see also
Pennhurst State School & Hospital, 465 U.S. at 98-99; Quern
v. Jordan, 440 U.S. 332, 342-45 (1979).
For example, in Atascadero State Hospital v. Scanton,
supra, Congress had included in the Rehabilitation Act both
provisions for funding employment programs for the handi-
capped and, subsequently, remedies for violations of the Act.
Neither such provisions nor California’s acceptance of funds
provided by the Act were enough to constitute the sort of
“unequivocal” waiver necessary to subject the state to federal
court jurisdiction with regard to claimed violations of the Act.
Thus, while states themselves may waive or Congress may,
by statute, override Eleventh Amendment immunity, there has
been no finding—or even argument—that this occurred here.
Cf. Quern v. Jordan, supra; Hutto v. Finney, 437 U.S. 678
(1978); Fitzpatrick v. Bitzer, 427 U.S. 445 (1976).
Il. “BAD FAITH” ATTORNEYS’ FEES ARE BARRED
BY THE ELEVENTH AMENDMENT
“Bad Faith” fee awards have been found to be a form of
damages—and, therefore, to violate the Eleventh Amend-
ment—by the United States Court of Appeals for the Sixth
Circuit. Jordan v. Gilligan, 500 F.2d 701, 709 (6ih Cir. 1974),
cert. denied, 421 U.S. 991 (1975) (“Although appeilees urge
that attorneys’ fees are analogous to costs, the taxing of which
is permitted against states [footnote omitted], the test for
determining whether a particular type of relief passes muster,
as set out in Edelman, indicates the opposite.”); Taylor v.
Perini, 503 F.2d 899, 901 (6th Cir. 1974), vacated on other
grounds, 421 U.S. 982 (1975) (“such an award is barred by the
Eleventh Amendment”); Huecker v. Milburn, 538 F.2d 1241,
1244 (6th Cir. 1976) (“This court has found no meaningful
distinction between an award of attorneys’ fees and an award
of damages for purposes of the Eleventh Amendment, where
the award is for ‘a past breach of legal duty’ by state officials
Pa, ®
The Fourth Circuit has also held that such awards violate the
Eleventh Amendment. Hallmark Clinic v. North Carolina
Department of Human Resources, 519 F.2d 1315, 1317 (4th
Cir. 1975); see also Woolfolk v. Brown, 358 F. Supp. 524, 537
(E.D. Va. 1973), aff'd in part and rev’d in part, 538 F.2d 598
(4th Cir. 1976). Additionally, district courts in other circuits
have held that the Eleventh Amendment bars an award of
attorneys’ fees against the state. United States v. Washington,
66 F.R.D. 477, 481 (W.D. Wash. 1974) (an award of attorneys’
fees would clearly violate the fiscal integrity of the state and is
thereby precluded by the Eleventh Amendment); Murgia v.
Commonwealth of Massachusetts Board of Retirement, 386
F. Supp. 179, 182 (D. Mass. 1974), summarily aff'd, 421 U.S.
972 (1975) (bad faith fees award “reflects independent policy
considerations unrelated to the enforcement of injunctions,
and in no sense can be termed ‘integral’ to such relief.”).
The application, then, of the Eleventh Amendment to the
awarding of “bad faith” attorneys’ fees by a federal court is
supported by both a substantial body of lower court case law,
and also by the decisions of this Court that have strictly
construed the principle of state sovereign immunity. Indeed,
“the fundamental nature of the interests implicated by the
Eleventh Amendment dictates this conclusion.” See Atasca-
dero, 105 S. Ct. at 3147.
Ht. THE CONFLICT AMONG THE CIRCUITS MAY
ONLY BE RESOLVED BY THIS COURT
In its opinion in this case, the Second Circuit wrote,
“Although the Supreme Court arguably considers the
issue Of whether the Eleventh Amendment bars an award
of attorneys’ fees against a state under the common law
an open one, [footnote omitted] and although other
circuits are split on this issue, [footnote omitted] we have
consistently held that the Eleventh Amendment is not a
bar.” Sierra Club v. United States Army Corps of Engi-
neers, 776 F.2d 383, 388-89 (A 7) (emphasis added).
While a split in the circuits clearly exists, it has not been
described accurately by the Second Circuit.* For example, in
Bond v. Stanton, 528 F.2d 688, 690-92 (7th Cir.), vacated and
remanded, 429 U.S. 973 (1976), the Seventh Circuit sustained
an award of “bad faith” attorneys’ fees. But this Court
vacated that judgment and remanded the case for considera-
5 The Second Circuit described the split among “other circuits” in this
manner:
“Compare Bond v. Stanton, $28 F.2d 688, 690-92 (7th Cir. 1976),
remanded, 429 U.S. 973 (1976); Thonen v. Jenkins, 517 F.2d 3, 7-8
(4th Cir. 1978); Souza v. Travisono, $12 F.2d 1137, 1139-40 (Ist
Cir.), remanded, 423 U.S. 809 (1975), with Hallmark Clinic v.
North Carolina Department of Human Resources, 519 F.2d 1315,
317 (4th Cir. 1975); Jordon v. Gilligan, $00 F.2d 701, 705-10 (6th
Cir. 1974), cert. denied, 421 U.S. 991 (1978).” 776 F.2d at 388-89
0.3. tA 7).
tion in light of 42 U.S.C. § 1988, which provides a statutory
basis for such an award. In Souza v. Travisono, 512 F.2d 1137,
1139-40 (1st Cir.), vacated and remanded, 423 U.S. 809 (1975),
the First Circuit sustained an award of attorneys’ fees against
Rhode !sland officials under the “public benefit-private attor-
ney general” theory. This Court, however, vacated that judg-
ment and remanded the case for further consideration in light
of Alveska Pipeline Service Co. v. Wilderness Society, 421 U.S.
240 (1975), which rejected the “private attorney general”
rationale. On remand, the district court and First Circuit relied
on 42 U.S.C. § 1988 rather than on common law principles for
a new award of attorneys’ fees. Souza v. Southworth, 564 F.2d
609, 610 (ist Cir. 1977). Thus, neither of these cases comports
with the Second Circuit’s interpretation.
The Second Circuit correctly cited Thonen v. Jenkins, 517
F.2d 3 (4th Cir. 1975), as a case in which “bad faith” fees were
awarded against a state, but failed to note that it was soon
followed by Hallmark Clinic, supra, which reached the oppo-
site result. In the present case, however, the Second Circuit
relied not upon other Circuits, but upon a line of its own cases
that misinterpret Edelman and two other cases decided by this
Court. In so doing, the Second Circuit ignored a long line of
this Court’s Eleventh Amendment decisions that require the
opposite result. See, e.g., pp. 5-6, supra.
The Second Circuit clearly misapplies Hutto v. Finney, 437
U.S. 678 (1978), where this Court held that an award of
attorneys’ fees against the State of Arkansas did not violate the
Eleventh Amendment, for the basis of that award was not the
“bad faith” exception invoked here. The district court in Hutto
had previously ordered a series of remediai measures to correct
Eighth and Fourteenth Amendment violations in the Arkansas
prison system; none of these orders was complied with. Finally,
the district court informed the parties that it would award
attorneys’ fees and costs if the plaintiffs had to return to court
to enforce the court’s orders. 437 U.S. at 683-84. Subsequently,
when the prison officials still had not complied with the orders,
10
the district court found that they had acted in bad faith and
awarded attorneys’ fees to the plaintiffs for their return to
court to enforce the prior orders. 437 U.S. at 685.
In Hutto—unlike the instant case—the award was needed to
protect the court’s ability to insure compliance with an order
once the order was entered and non-compliance was demon-
strated. The district court “was not remedying the present
effects of a violation in the past.” 437 U.S. at 687 n.9. Rather,
the award “served the same purpose as a remedial fine imposed
for civil contempt. It vindicated the District Court’s authority
over a recalcitrant litigant.” 437 U.S. at 691.
This Court held that:
“If a state agency refuses to adhere to a court order, a
financial penalty may be the most effective means of
insuring compliance. The principles of federalism that
inform Eleventh Amendment doctrine surely do not re-
quire federal courts to enforce their decrees only by
sending high state officials to jail [footnote omitted]. The
less intrusive power to impose a fine 1s properly treated as
ancillary to the federal court’s power to impose injunctive
relief.” Jd.
Hutto, then, holds only that a district court may award
attorneys’ fees when such an award is necessary in order to
enforce its orders. Moreover, this Court made clear in Quern v.
Jordan, 440 U.S. at 344-45, that the fee award in Hutto had a
statutory basis in 42 U.S.C. § 1988.
The Second Circuit also relies mistakenly on Sims v. Amos,
340 F. Supp. 691 (M.D. Ala.), summarily aff'd, 409 U.S. 942
(1972), a pre-Ede/man summary affirmance of a district court
award of attorneys’ fees against a state. See Gagne v. Maher,
594 F.2d 336, 342 n.5 (2d Cir. 1979), aff'd on other grounds,
448 U.S. 122 (1980). Sims, however, was implicitly overruled
1]
by Edelman’ and clearly regarded by this Court as something
less than a definitive statement by it on the issue. Alveska
Pipeline, 421 U.S. at 269 n.44. Indeed, this Court declined to
reach the Eleventh Amendment issue in its review of Gagne,
where it clearly regarded the question of whether the Eleventh
Amendment bars a “bad faith” fee award against a state as an
open one. Maher v. Gagne, 448 U.S. 122, 130 (1980).
The key to the Second Circuit’s erroneous interpretation of
Edelman is in its distortion of the meaning of the statement of
this Court that the injunctive relief granted by a federal court
might legitimately have an “ancillary effect on the state
treasury.” 415 U.S. at 668 (emphasis added). From this state-
ment, the Second Circuit has created an inconsistent jurisdic-
tional doctrine that an award of money damages is sometimes
“ancillary” to an injunction. 776 F.2d at 389 (A 7-8). This type
of award, however, is indistinguishable from the “equitable
restitution” that was forbidden in Edelman. 415 U.S. at
665-71.
This Court has recently made plain the very significant
difference between the “ancillary effect” reterred to in
Edelman and the sort of ancillary jurisdiction the Second
Circuit seeks to exercise here. County of Oneida v. Oneida
Indian Nation, U.S. , 105 S. Ct. 1245, 1260 (1985)
(“The Eleventh Amendment forecloses, however, the applica-
tion of normal principles of ancillary and pendent jurisdiction
where claims are pressed against the State.”). See also Penn-
hurst State School & Hospital, 465 U.S. at 122 (“Under
Edelman v. Jordan, supra, a suit against state officials for
retroactive monetary relief, whether based on federal or state
law, must be brought in state court.”)
This Court has laid the foundation for the questions raised
by this petition without actually answering them. The Second
4 In Edelman, this Court expressly overruled a group of summary
affirmances. 415 U.S. at 670 n.13. This list of cases, which did not
include Sims, “was not necessarily intended to be exhaustive.” Quern
v. Jordan, 440 U.S. at 336-37 n.5.
12
Circuit, though, has treated as settled the issue that this Court
has not yet reached. The time has come now to reach that
issue, for the present case involves no arguable statutory basis
for the fee award and flies in the face of this Court’s recent
decisions requiring an unequivocal authorization by Congress
or the state itself for any award of damages, no matter how it
is described or how it is rationalized.
CONCLUSION
As demonstrated above, the Court of Appeals’ holding in
this case continues a split among the circuits that this Court
should resolve. Moreover, the Court of Appeals’ holding
herein violates the Eleventh Amendment’s prohibition of an
award of money damages against a state. For these reasons,
New York State respectfully requests that this Court grant this
petition for a writ of certiorari.
Dated: January 27, 1986
Respectfully submitted,
Paul J. Curran
Counsel of Record
Bruce Margolius
Lauri A. Novick
KAYE, SCHOLER, FIERMAN,
HAYS & HANDLER
425 Park Avenue
New York, New York 10022
(212) 407-8000
APPENDIX A
Al
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Argued Feb. 26, 1985
Decided Oct. 28, 1985
Nos. 634, 635 and 747, Dockets 84-6287,
84-6289 and 84-6293
aos
SIERRA CLUB, The City Club of New York, Business For Mass
Transit, Inc., NYC Clean Air Campaign, Inc., West 12th
Street Block Association, Hudson River Fishermen’s Asso-
ciation, Hudson County Citizens For Clean Air, Seymour
Durst, Otis Burger, Mary Rowe, and Howard Singer,
Plaintiffs,
Sierra Club, The City Club of New York, NYC Clean Air
Campaign, Inc., and Hudson River Fishermen’s Association,
Plaintiffs-Appellees, Cross-Appellants,
—_—_V.—
UNITED STATES ARMY CORPS OF ENGINEERS, John Marsh, as
Secretary of the Army of the United States, Joseph K.
Bratton, as Chief of Engineers, Walter M. Smith, Jr., as
New York District Engineer of the United States Army
Corps of Engineers, and William C. Hennessy, as Commis-
sioner of the New York State Department of Transporta-
tion, United States Department of Transportation, Andrew
L. Lewis, Jr., as Secretary of Transportation of the United
States, Raymond A. Barnhart, as Administrator of the
Federal Highway Administration,
Defendants-Appellants, Cross-Appellees.
THE CITY OF NEW YORK,
Defendant-Intervenor.
A2
HOWARD WILSON, Asst. U.S. Atty., S.D.N.Y., New York
City (Rudolph W. Giuliani, U.S. Atty., S.D.N.Y., Peter C.
Salerno, Asst. U.S. Atty., S.D.N.Y., New York City, of coun-
sel), for Defendant-Appellant U.S. Army Corps of Engineers.
PAUL J. CURRAN, New York City (Bruce Margolius, Steven
E. Shapiro, Kaye, Scholer, Fierman, Hays & Handler, New
York City, of counsel), for Defendant-Appellant New York
State Dept. of Transp.
ALBERT K. BUTZEL, New York City (Mitchell S. Bernard,
Jean M. McCarroll, Butzel & Kass, New York City, of coun-
sel), for Plaintiffs-A ppellees.
++
Before:
OAKES, MESKILL and KEARSE, Circuit Judges.
MESKILL, Circuit Judge:
Appellants the United States Army Corps of Engineers
(Corps) and the Commissioner of the New York State Depart-
ment of Transportation (State) appeal from a judgment entered
against them and the Federal Highway Administration
(FHWA) in the United States District Court for the Southern
District of New York, Griesa, J., awarding attorneys’ fees to
appellees. The district court awarded the fees under the bad
faith exception to the American Rule. Appellees cross-appeal
the denial of their request for an award of fees under the Equal
Access to Justice Act, 28 U.S.C. § 2412(d) (1982) (EAJA). For
the reasons that follow, we affirm in part, reverse in part and
remand the case to the district court.
BACKGROUND
The instant appeal and cross-appeal involve “Westway,” the
once-proposed replacement for a portion of the West Side
Highway in lower Manhattan. Other installments in this
lengthy dispute are Sierra Ciub v. United States Army Corps of
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Engineers, 772 F.2d 1043, 1046 (2d Cir. 1985); Sierra Club v.
United States Army Corps of Engineers, 732 F.2d 253 (2d Cir.
1984); Sierra Club v. United States Army Corps of Engineers,
701 F.2d 1011 (2d Cir. 1983); and Sierra Club v. Hennessy, 695
F.2d 643 (2d Cir. 1982). In this appeal and cross-appeal we are
cailed on to review the district court’s ruling on appellees’
attorneys’ fees application. Because the facts of this case have
been exhaustively reviewed in our previous opinions and in the
district court’s opinions, we detail here only those facts that
are necessary to an understanding of our decision.
The district cou;t’s decision to award fees is reported in
Sierra Club vy. United States Army Corps of Engineers, 590
F.Supp. 1509 (S.D.N.Y. 1984) (Sierra Club III). The award is
based on conduct that occurred at two separate trials, the
results of which are reported in Action for Rational Transit v.
West Side Highway Project, 536 F.Supp. 1225 (S.D.N.Y. 1982),
and Sierra Club v. United States Army Corps of Engineers,
541 F.Supp. 1367 (S.D.N.Y. 1982) (Sierra Club I). Action for
Rational Transit involved appellees,’ the Corps and the State.
The dispute concerned the Corps’ issuance of a landfill permit
for Westway. Appellees claimed that because the Corps relied
on an Environmental Impact Statement (EIS) issued in 1977 by
the State and FHWA which inadequately dealt with fisheries
issues, refused to supplement that EIS when subsequent studies
showed the magnitude of the EIS’ error and failed to indepen-
dently and adequately to consider fisheries issues, its issuance
of the landfill permit violated the National Environmental
Policy Act (NEPA), 42 U.S.C. §§ 4321 et seq. (1982), section
404 of the Clean Water Act, 33 U.S.C. § 1344 (1982), and
section 10 of the Rivers and Harbors Appropriation Act of
1899, 33 U.S.C. § 403 (1982). The district court agreed that
NEPA, the Clean Water Act and the Rivers and Harbors Act
I Although there were twelve plaintiffs before the district court, only
four joined in the fee application. According to appellees, this was
done because only these four plaintiffs contributed to the costs of
litigation. Br. of Appellees at 1 n. 1. See also Sierra Club v. United
States Army Corps of Engineers, 590 F.Supp. 1509, 1512 n. 1
(S.D.N.Y. 1984).
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had been violated and issued an injunction setting aside the
landfill permit.
After the first trial was concluded, the complaint was
amended to add FHWA as a defendant and the parties were
given the opportunity to offer additional evidence. Appellees,
the State and FHWA were involved in this second trial. At issue
was FHWA’s approval of Westway and its alleged violation of
NEPA by relying on the inaccurate 1977 EIS and refusing to
supplement that EIS when new fisheries information became
available. In Sierra Club I, the district court found that the
1977 EIS was inaccurate and inadequate when issued and that
“FHWA, in collaboration with the [State], acted in willful
derogation of the requirements of law in failing to issue a
corrective supplemental environmental impact statement.” 541
F.Supp. at 1383. It, therefore, nullified FHWA approval of the
design, location and funding of Westway.
Appeals were taken from both district court decisions. The
Corps and FHWA limited their appeals to certain aspects of the
relief order. The State, however, challenged both the relief
ordered and the merits of the court’s decisions. The results of
these appeals are reported in Sierra Club v. United States
Army Corps of Engineers, 701 F.2d 1011 (2d Cir. 1983) (Sierra
Club II).
On the merits, we affirmed the district court’s conclusion
that FHWA and the Corps had violated NEPA by relying on
the 1977 EIS in reaching their decisions. 701 F.2d at 1029-31.
We also shared the district court’s view that initial responsibil-
ity for the EIS’ inaccuracies on the fisheries issues must be
attributed to the State. /d. at 1031. The court’s finding that the
Corps had violated the Clean Water Act was also affirmed. /d.
at 1031-33. However, because no private cause of action exists
under section i0 of the Rivers and Harbors Act, we reversed
the finding that the Corps had violated that section. /d. at
1033.
With respect to the relief ordered by the district court, we
upheld the court’s requirement that a supplemental EIS on
fisheries issues be prepared before further work on Westway
could proceed. Jd. at 1034-35. We also affirmed the court’s
AS
requirement that FHWA, the Corps and the State keep “rec-
ords of all activities, deliberations, and communications. . .
which occur in relation to [the Westway] permit application.”
Id. at 1040-41. However, we vacated those parts of the court’s
order that required the supplemental EIS to include informa-
tion on nonfisheries issues, id. at 1035-37, that prohibited
FHWA and the Corps from acting as joint lead agencies, /d. at
1041-42, and that appointed a special master to oversee com-
pliance by FHWA and the Corps with the court’s directives, id.
at 1042-49.
Appellees’ fee application was originaliy filed after the
district court’s decision in Action for Rational Transit and was
supplemented after the court’s decision in Sierra Club I and
our decision in Sierra Club IT. Appellees sought to recover
their fees from FHWA, the Corps and the State under the bad
faith and common benefit exceptions to the American Rule.
They also sought to recover fees from FHWA and the Corps
under the EAJA.
In Sierra Club IH, the district court rendered its decision on
the fee application. The court refused to award fees under the
common benefit rule because of its belief that the rule was not
applicable to the case before it. 590 F.Supp. at 1525-26. It also
rejected the claim for fees under the EAJA, holding that one
plaintiff’s ineligibility for fees under the EAJA barred all
plaintiffs from recovering fees. /d. at 1526.
The court did, however, award fees and disbursements under
the bad faith exception to the American Rule. The court found
that the Corps and the State acted in bad faith at the first trial.
Id. at 1517-22. It also found that FHWA and the State acted in
bad faith before and during the second trial. /d. at 1522-25.
Finally, the court awarded fees against the State in connection
with the appeal, finding that the State’s appeal on the merits
was “merely a further assertion of the baseless positions taken
in the district court.” /d. at 1525. Limiting the award to
expenses incurred on fisheries related work and declining to
apply a multiplier, the court awarded appellees a total of
$290,254.
A6
In awarding fees against the State, the court rejected the
State’s claim that it was immune from a fee award. First,
relying on our decision in Gagne v. Maher, 594 F.2d 336 (2d
Cir. 1979), aff'd on other grounds, 448 U.S. 122, 100 S.Ct.
2570, 65 L.Ed.2d 653 (1980), the court rejected the State’s
argument that the award was barred by the Eleventh Amend-
ment. Second, reasoning that an award of fees under the bad
faith exception differs from an award of punitive damages, the
court held that the award of bad faith fees against the State
was not barred by public policy as expressed in City of
Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748,
69 L.Ed.2d 616 (1981).
DISCUSSION
The State and the Corps, but not FHWA, appeal the award
of fees. The State raises four basic arguments: (1) the award of
fees against it violates the Eleventh Amendment; (2) the award
of fees under the bad faith exception constitutes an award of
punitive damages from which it is immune; (3) the district
court’s finding of bad faith is unwarranted; and (4) the district
court’s calculation of fees is defective. The Corps limits its
appea: to a claim that the record does not support the district
court’s finding of bad faith. For their part, appellees cross-
appeal the court’s holding that they are ineligible for fees
under the EAJA.
A. Immunity
As a threshold matter, the State argues that it is immune
from an award of fees. This argument has two components.
First, the State claims that the Eleventh Amendment is an
absolute bar to an award of fees against a state. In making this
argument, the State relies on the general proposition an-
nounced in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347,
39 L.Ed.2d 662 (1974), that absent a waiver of sovereign
immunity a federal court may not award money damages
against a state. Second, the State claims that even if the
Eleventh Amendment does not bar an award of attorneys’ fees
A7
against a state in general, the award of fees under the bad faith
exception constitutes punitive damages, the awarding of which
is barred by public policy. In making this argument, the State
relies on City of Newport, where the Supreme Court invoked
public policy considerations in reversing an award of punitive
damages against a municipality.
The State’s Eleventh Amendment argument need not detain
us long. Although the Supreme Court arguably considers the
issue of whether the Eleventh Amendment bars an award of
attorneys’ fees against a state under the common law an open
one,” and although other circuits are split on this issue,’ we
have consistently held that the Eleventh Amendment is not a
bar.
The first case in which we expressed our view that an award
of fees against a state fits within the “ancillary effect” doctrine
of Edelman was Jordan ¥. Fusari, 496 F.2d 646, 651 (2d Cir.
1974). We subsequently affirmed that position in Class v.
Norton, 505 F.2d 123, 126-27 (2d Cir. 1974), and Fitzpatrick v.
Bitzer, 519 F.2d 559, 571 (2d Cir. 1975), aff'd in part, rev’d in
part, 427U.S. 445, 96 S.Ct. 2666, 49 L.Ed.2d 614 (1976). Most
recently, our position on this issue was restated in Gagne, 594
F.2d at 336. The State points to no decision since Gagne that
causes us to question our long held position. “Thus, we adhere
to our own precedents, which we believe are consistent with
2 Compare Alyeska Pipeline Service Co. v. Wilderness Society, 421
U.S. 240, 269 n. 44, 95 S.Ct. 1612, 1627, n. 44, 44 L.Ed.2d i41 (1975)
(award of fees against a state would raise Eleventh Amendment issues
that Court does not decide) with Hutto v. Finney, 437 U.S. 678,
689-92, 98 S.Ct. 2565, 2572-74, 57 L.Ed.2d 522 (1978) (award of bad
faith fees against a state that refused to comply with injunction
upheld).
3 Compare Bond v. Stanton, 528 F.2d 688, 690-92 (7th Cir. 1976),
remanded, 429 U.S. 973, 97 S.Ct. 479, 50 L.Ed.2d 581 (1977); Thonen
v. Jenkins, 517 F.2d 3, 7—8 (4th Cir. 1975); Souza v. Travisono, 512
F.2d 1137, 1139—40 (1st Cir.), remanded, 423 U.S. 809, 96 S.Ct. 19, 46
L.Ed.2d 29 (1975), with Hallmark Clinic v. North Carolina Depari-
ment of Human Resources, 519 F.2d 1315, 1317 (4th Cir. 1975); Jordan
v. Gilligan, 500 F.2d 701, 70S5—10 (Sth Cir. 1974), cert. denied, 421
U.S. 991, 95 S.Ct. 1996, 44 L.Ed.2d 481 (1975).
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Supreme Court authority, and hold that the award of attor-
neys’ fees in this case was a permitted ‘ancillary effect’ of a
proper prospective decree and therefore not barred by the
Eleventh Amendment.” Gagne, 594 F.2d at 342.*
We also find the State’s punitive damages argument uncon-
vincing. The basis of its argument is City of Newport. In that
case, the Supreme Court held that a municipality is immune
from an award of punitive damages under 42 U.S.C. § 1983
(1982). The Court stated that punitive damages “are not
intended to compensate the injured party, but rather to punish
the tortfeasor. . . and to deter him and others from similar
extreme conduct.” 453 U.S. at 266-67, 101 S.Ct. at 2759.
Looking to the punitive component, the Court explained that
“Injeither reason nor justice suggests that such retribution
should be visited upon the shoulders of blameless or unknow-
ing taxpayers.” Jd. at 267, 101 S.Ct. at 2760.
Seizing on the punitive aspect of an award of bad faith
attorneys’ fees, the State claims that an award of bad faith fees
is barred by the holding of City of Newport. We believe that an
award of fees under the bad faith exception rests on different
principles than does an award of punitive damages. Although
the award of fees for bad faith has a punitive and deterrent
flavor, the award serves a compensatory purpose. Cf. Stolberg
v. Members of the Board of Trustees, 474 F.2d 485, 489-90 (2d
Cir. 1973), cert. denied, 429 U.S. 897, 97 S.Ct. 260, 50 L.Ed.
2d 181 (1976). That is why we require that the award be limited
to those expenses necessary to counter the losing party’s bad
faith. Browning Debenture Holders’ Committee v. DASA
Corp., 560 F.2d 10678, 1089 (2d Cir. 1977). Thus, we do not
find the rationale of City of Newport controlling.
Our position is supported by relevant Supreme Court prece-
dent. Hutto v. Finney, 437 U.S. 678, 98 S.Ct. 2565, 57 L.Ed.2d
4 The State attempts to limit Gagne’s holding to an allowance of fees
under a statute enacted pursuant to section 5 of the Fourteenth
Amendment. A reading of Gagne, however, clearly shows that we
talked of two exceptions to the Eleventh Amendment, one under
Edelman and one under section 5. 594 F.2d at 341—42. Thus, we reject
the State’s narrow reading of Gagne.
AY
522 (1978). In its reliance on City of Newport, the State ignores
Hutto, which is more directly on point. In Hutto, the Court
sanctioned the use of a fee award to secure a state’s compliance
with a district court’s order. The basis of the award was the
state’s bad faith. /d. at 689, 98 S.Ct. at 2572. Nowhere did the
Court suggest that such an award was barred as a form of
retribution against innocent taxpayers. Thus, Hutto allows a
federal court to so “penalize” a state based on its bad faith
conduct before that court and nothing in City of Newport
indicates a retreat from that position.
In sum, a federal court has the inherent power to award
attorneys’ fees against a party who litigates in bad faith. Such
authority is a necessary incident to the power to regulate the
conduct of the parties before the court. In the instant case,
neither the Eleventh Amendment as construed in Ede/man nor
public policy as expressed in City of Newport immunizes the
State from the result of the court’s exercise of this power.
Thus, we hold that the district court had the authority to
award fees against the State.
B. Bad Faith
1. Standards
Under what is known as the American Rule, parties to
litigation normally pay their own attorneys’ fees regardless of
the lawsuits outcome. See Alyeska Pipeline Service Co. vy.
Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44
L.Ed.2d 141 (1975). There are, however, certain exceptions to
this general rule. One of these exceptions is where the court
determines that the unsuccessful party has “ ‘acted in bad
faith, vexatiously, wantonly, or for oppressive reasons.’ ” Aly-
eska, 421 U.S. at 258-59, 95 S.Ct. at 1622 (quoting F-D. Rich
Co. v. United States, 417 U.S. 116, 129, 94 S.Ct. 2157, 2165,
40 L.Ed.2d 703 (1974)). The award of feés pursuant to this
exception is an exercise of a federal court’s “inherent equitable
powers.” Eastway Construction Corp. v. City of New York,
762 F.2d 243, 253 (2d Cir. 1985).
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Under the law in this Circuit, to award fees under the bad
faith exception a court must find clear evidence that the losing
party’s claims were “entirely without color and made for
reasons of harassment or delay or for other improper pur-
poses.” Browning Debenture Holders’, 560 F.2d at 1088;
Eastway Construction, 762 F.2d at 253.° The test is conjunctive
and neither meritlessness alone nor improper purpose alone
will suffice. Colombrito v. Kelly, 764 F.2d 122, 133 (2d Cir.
1985); PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 898 (2d
Cir.), cert. denied, 464 U.S. 936, 104 S.Ct. 344, 78 L.Ed.2d
311 (1983). Under this test, a claim is “entirely without color”
when it lacks any legal or factual basis. Nemeroff v. Abelson,
620 F.2d 339, 348 (2d Cir. 1980) (per curiam) (Nemeroff /).
While there is no precise definition cf “improper purpose” it
may be evidenced by conduct occurring either before or during
trial. Cf. Hall v. Cole, 412 U.S. 1, 15, 93 S.Ct. 1943, 1951, 36
L.Ed.2d 702 (1973).
An award of fees under the bad faith exception calls for a
iwo-tiered standard of review. A district court’s determination
that bad faith exists is a factual finding which may only be set
aside if it is clearly erroneous. See Perichak v. International
Union of Electrical Radio and Machine Workers, 715 F.2d 78,
79 (3d Cir. 1983); Lipsig v. National Student Marketing Corp..,
663 F.2d 178, 181 (D.C. Cir. 1980); Nemeroff 1, 620 F.2d at
347. In addition, because the awarding of fees involves an
exercise Of equitable powers, the decision to award or deny fees
5 The parties talk of two types of bad faith, pre-litigation bad faith
and bad faith during trial, and set forth different standards to control
each situation. Compare the supposed pre-litigation standard of
Stolberg v. Members of the Board of Trustees, 474 F.2d 48§, 490 (2d
Cir. 1973) (was the bringing of the action unnecessary and compelled
by the defendant’s “unreasonable, obdurate obstinacy”) with the
Browning Debenture Holders’ standard, 560 F.2d at 1088 (did a party
present colorless claim for an improper purpose). While there may be
situations where this distinction is useful, in the instant case, where the
parties have gone through two trials and an appeal, we see no reason to
make such a distinction. Thus, here we apply only the Browning
Debenture Holders’ standard and look to activity both before and
during trial for evidence of an improper purpose. See Republic of
Cape Verde v. A & A Partners, 89 F.R.D. 14, 22-25 (S.D.N.Y. 1980).
All
lies in the discretion of the district court. Thus, even where the
district court’s finding of bad faith is not clearly erroneous, we
must still review the award to determine if it was a proper
exercise of discretion. See Perichak, 715 F.2d at 80; Nemeroff
v. Abelson, 704 F.2d 652, 660-61 (2d Cir. 1983) (Nemeroff 11);
Lipsig, 663 F.2d at 181-82. If the court did not abuse its
discretion, the award of fees must be affirmed.
2. Merits
The various legal claims advanced by the Corps at the first
trial and by the State at both trials, as well as the factual
support for those claims, have been dealt with in great detail in
our Sierra Club II opinion and in the district court’s Sierra
Club III, Sierra Club I and Action for Rational Transit
opinions. We need not explore the legal and factual details of
those trials again. Briefly, the description in the 1977 EIS of the
area to be filled as a biological wasteland was a gross error.
The claims that this document could be relied on to support
agency action and that the subsequent data revealing the
magnitude of the EIS’ inaccuracy had been carefully consid-
ered and did not warrant supplementation were legally weak
and void of factual support. The district court’s finding that
these claims were entirely without color was not clearly erro-
neous.
The second part of the Browning Debenture Holders’ stan-
dard, improper purpose, is more troublesome. With respect to
the Corps, the district court merely stated that since the Corps’
defenses were colorless, “it must be concluded that [they] were
asserted for an improper purpose.” 590 F.Supp. at 1521. This
conclusion does not necessarily follow. Although a frivolous
position will often signal an improper purpose, we have never
held that a frivolous position may be equated with an improper
purpose. Such a simple equation would turn the two-part
standard into a one-part standard, a step we decline to take.
See, e.g., Colombrito, 764 F.2d at 133; PRC Harris, 700 F.2d
at 898; cf. Gianna Enterprises v. Miss Warld (Jersey) Ltd., 55\
F. Supp. 1348, 1360 (S.D.N.Y. 1982). In the absence of a
proper finding of improper purpose, the district court’s con-
Al2
clusion that the Corps acted in bad faith at the first trial must
be reversed.
The State stands in a different light. Although when discus-
sing the first trial the district court merely equated the Staie’s
colorless position with an improper purpose, later in its opin-
ion the court clearly identified the State’s improper purpose as
an attempted coverup. Furthermore, the court found that the
State’s bad faith pre-dated the litigation. The court stated:
There is simply no escape from the conclusion that the
authorized representatives of the State and FHWA en-
gaged in bad faith conduct prior to the litigation. More-
over, it is the kind of conduct which is most germane to
an application for attorneys’ fees. Part of the activities of
the State and FHWA consisted of an atiempt to create a
record of purported scientific judgment (e.g., the mislead-
ing conclusion in the LMS report) and purported agency
discretion (e.z., the October 9, 1980 letter from FHWA to
the Corps.). It is perfectly obvious that the intention was
to have this “record” available to forestall or rebut a
challenge to the agency action. This is exactly the use that
has been made of these materials. Defendants have relied
heavily on them for their defense in this litigation.
$90 F.Supp. at 1524 (footnote omitted); see also Sierra Club 1,
541 F.Supp. at 1381. We have previously stated our agreement
with this basic conclusion. Sierra Club IT, 701 F.2d at 1047. It
certainly is not clearly erroneous. Thus, the district court’s
finding that the State had an improper purpose must stand.°
Given the State’s manipulative and deliberately deceptive
conduct, we cannot say that the court’s decision to award fees
on the basis of this bad faith was an abuse of discretion. The
6 The State appears to claim that this finding only amounts to
pre-litigation bad faith and does not amount to bad faith during the
litigation. Our response is twofold. First, the distinction the State
draws between pre-litigation bad faith and bad faith during trial is not
relevant in this case. See note 5, supra. Second, given the nature of the
State’s conduct, it is only reasonable to conclude that this improper
purpose carried forward through both trials.
Al3
State was not a passive participant in this matter. It dratted the
1977 EIS; it controlled the data that showed the inadequacies
in the 1977 EIS; it misrepresented the significance of that data;
and it actively litigated the issues involved in these lawsuits. Its
claims that it owed no duty to anyone ring hollow. At least
when it sought federal funding for Westway and drafted the
1977 EIS, and definitely when it became involved in the lawsuit
before the district court, the State had a minimum duty to
refrain from bad faith actions. It failed to fulfill this duty.
Therefore, we affirm the district court’s award of bad faith
fees against the State based on the State’s conduct at the two
trials.
The district court also awarded fees based on the State’s
appeal of the merits of the district court’s rulings. The State
argues that this was error as only this Court may determine
whether fees should be awarded for an appeal. The district
court rejected this claim, asserting that it had authority to
award fees for an appeal under Perkins v. Standard Vil Co.,
399 U.S. 222, 90 S.Ct. 1989, 26 L.Ed.2d 534 (1970) (per
curiam).
We agree with the State’s position on this issue. There is a
basic distinction between determining entitlement to fees and
determining the amount of fees. Perkins merely holds that fees
expended on an appeal are recoverable under section 4 of the
Clayton Act and that the district court may calculate the
amount of fees for appellate work. There, the statute, not the
district court, determined entitlement to fees. Our opinion in
Cohen v. West Haven Board of Police Commissioners, 638
F.2d 496, 505-06 (2d Cir. 1980), is similar to Perkins. In Cohen,
we determined that a party prevailed on an appeal in a civil
rights case and remanded to the district court for a calculation
of fees. We did not state that the district court could determine
entitlement to attorney’s fees.
In fact, our court has twice expressed doubts about whether
a district court may make the determination of entitlement. In
Cheng v. GAF, 713 F.2d 886, 892 (2d Cir. 1983), vacated &
remanded on other grounds, __- U.S. ___, 105 S.Ct. 3493,
87 L.Ed.2d 626 (1985), we stated that “[a] rule permitting a
Al4
district court to sanction [a party] for appealing an adverse
ruling might deter even a courageous lawyer from seeking the
reversal of a district court decision.” More recently, in Argo
Marine Systems, Inc. v. Camar Corp., 755 F.2d 1006, 1015 (2d
Cir. 1985), we stated that “the determination of whether or not
to impose [attorneys’ fees for a frivolous appeal] is reserved to
the discretion of the Court.”
Cheng and Argo Marine Systems recognize that we, not the
district court that rendered the initial decision, should be the
judges of whether an appeal is so frivolous as to warrant the
imposition of attorneys’ fees. If appellees felt that the State’s
earlier appeal warranted such a sanction, it should have sought
relief from us at the time of that appeal. If we had found
attorneys’ fees appropriate, we could have remanded to the
district court for calculation. However, as appellees did not
seek relief at that time and we did not consider the issue, we
reverse the award of fees for the appeal.
C. Calculation of Fees
The State also argues that the district court’s calculation of
fees is defective. We agree with the State’s claim that the case
must be remanded for reconsideration.
First, although the district court indicated that it believed
that the hourly rates charged by appellees’ attorneys were
reasonable, there ic no indication that these rates were com-
pared with rates “charged for similar work by attorneys of like
skill in the area.” Cohen, 638 F.2d at 506. Such a comparison
“should have been the starting point for determination of a
reasonable award.” /d. In addition, the court did not deter-
mine that the hours spent on fisheries issues were reasonable
and not redundant. Cf. Hensley v. Eckerhart, 461 U.S. 424,
434, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983); Sealy, Inc. v.
Easy Living, Inc., 743 F.2d 1378, 1385 (9th Cir. 1984). Such a
determination helps to ensure that the fees awarded only
compensate for the expenses necessary to counter the bad
faith. Cf. Browning Debenture Holders’, 560 F.2d at 1088-89.
However, we reject the State’s claim that our decision in
New York State Association For Retarded Children v. Carey,
Al5
711 F.2d 1136 (2d Cir. 1983), requires that the award of fees be
disallowed for failure to submit contemporaneous time rec-
ords. The work done for appellees preceded our decision in
Carey, which by its express terms had only prospective effect.
Id. at 1154. Appellees provided the district court with “a
detailed description of the work carried out and the hours
spent on the fisheries issue.” Sierra Club III, 590 F.Supp. at
1527. This description showed separately the work done for the
two trials. Jd. As appellees’ application was not governed by
Carey, these records are adequate.’
In sum, we remand to the district court for a recalculation of
the fee award along the lines we have indicated. However, in
doing so, further evidence need not be received unless the
district court feels that such evidence is necessary in order to
fulfill our mandate.
D. EAJA
Appellees cross-appeal the district court’s refusal to award
fees under the EAJA. The EAJA allows a prevailing “party” in
a civil action against the United States to recover its fees unless
the court finds that the litigation position of the United States
was “substantially justified.” 28 U.S.C. § 2412(d) (1982). The
term “party” is defined, inter alia, as a person whose net worth
was less than $1 million at the time the action was commenced.
Id. at § 2412(d)(2)(B).
The district court found that all of the conditions for an
award under the EAJA were satisfied except that one of the
non-applicant plaintiffs* had a net worth exceeding $1 million.
7 We reject appellees’ claim that the district court erred in failing to
award fees on non-fisheries issues and in failing to award fees for time
spent on the fee application. There was no finding of bad faith on the
part of the State, the Corps or FHWA with respect to non-fisheries
issues. Thus, there was no reason to award fees for those issues.
Indeed, given appellees’ initial scaitergun approach to this lawsuit,
they should be satisfied that fees were not awarded against them on
some of the non-fisheries issues. With respect to the refusal to award
fees for the fee application, we see nv abuse of discretion on the
district court’s part.
8 Not all of the plaintiffs joined in the fee application, see note 1,
supra.
Al6
Attributing this plaintiff’s ineligibility to all plaintiffs, the
court denied the request for fees under the EAJA, stating: “It
would appear to be reasonable to consider plaintiffs together
for the sake of applying [section 2412(d)(2)(B)]. Since one of
the plaintiffs has a net worth over $1,000,000, recovery is
precluded under 28 U.S.C. § 2412(d).” 590 F.Supp. at 1526.
Appellees challenge this reading of the statute.
As an initial matter, the entire panel agrees with the district
court that all other conditions for an award are satisfied.
Unlike an award of fees under the bad faith exception, no
improper motive need be shown to recover under the EAJA.
All that is at issue is whether the government’s actions were
substantially justified. The government, which bears the bur-
den of proving this, must show that its case was reasonable,
i.e., that it had a reasonable basis in both law and fact. See
Dubose v. Pierce, 761 F.2d 913, 917-18 (2d Cir. 1985). As we
explained earlier, the claims made by the Corps and FHWA
were not reasonable.
The district court noted that the only issue is whether one
plaintiff’s ineligibility under the EAJA should be attributed to
all plaintiffs. The statute is silent on this point and there is no
case law directly on point. Appellees claim that the statute
should be read so that only the status of the applicants is
considered when determining eligibility for fees. The Corps,
naturally, agrees with the district court’s position that the court
should look beyond the applicants to all of the plaintiffs and
that if one plaintiff is ineligible, they are all ineligible.
Judge Oakes and Judge Kearse believe that a point midway
between the two extremes advanced by the parties should be
adopted. They believe that in determining eligibility, a court
must look beyond the applicants to all of the plaintiffs. The
court must then determine the number of eligible plaintiffs and
award fees based on the ratio of eligible plaintiffs to total
plaintiffs, here eleven to twelve. This result is supported by
Citizens Council of Delaware County v. Brinegar, 741 F.2d 584
(3d Cir. 1984). In Citizens Council, the court found that two of
the four plaintiffs were ineligible for fees. Yet, that court
remanded the case for a determination as to the fees the two
Al7
eligible plaintiffs were entitled to recover. 741 F.2d at 598.
Thus, the majority holds that the district court’s conclusion
that appellees are not entitled to recover under the EAJA is
reversed. The case is remanded to the court for a determination
of fees recoverable under the EAJA in accordance with the
majority view.
I dissent from the majerity’s construction of the EAJA and
would affirm the district court’s decision on this point. The
EAJA, as a waiver of sovereign immunity, must be strictly
construed and not enlarged beyond what a fair reading of the
language requires. See Ruckelshaus v. Sierra Club, 463 U.S.
680, 685-86, 103 S.Ct. 3274, 3277, 77 L.Ed.2d 938 (1983);
Lauritzen v. Lehman, 736 F.2d 559, 555-56 (9th Cir. 1984). |
believe that the majority’s reading of the statute enlarges it
beyond what a fair reading requires.
The statute itself is silent on the point in question. However,
I believe that the statute’s policy supports the district court’s
interpretation. The EAJA was passed for a specific purpose; to
ensure that parties would noi be prevented from contesting
government action simply because they could not afford to
litigate the matter. See, e.g., Boudin v. Thomas, 732 F.2d 1107,
1112-13 (2d Cir. 1984); Citizens Council, 741 F.2d at 589-90.
When a group of twelve plaintiffs, one of whom has a net
worth of over $1 million, join together, congressional concern
about access to the courts is not implicated. Indeed, it seems
incongruous to hold that if the ineligible plaintiff alone chal-
lenged Westway, fees could not be awarded under the EAJA,
but because the ineligible plaintiff was joined by less wealthy
friends, fees may be awarded. Thus, strictly construing the
Statute in light of its purpose, I would affirm the district
court’s decision that appellees may not recover fees under the
EAJA.
CONCLUSION
In sum, we affirm the district court’s finding that the State’s
bad faith justifies a shifting of fees under the bad faith
exception to the American Rule. We reverse the award of fees
Al8
based on the State’s appeal of the merits of the district court’s
rulings. We reverse the court’s finding that the Corps acted in
bad faith. We reverse the court’s holding that appellees, cross-
appellants are ineligible for a recovery of fees under the EAJA.
Finally, we remand the case for reconsideration and adequate
explanation of the fees awarded against the State and for
computation of fees against the Corps and FHWA under the
EAJA. The parties shall bear their own costs.
APPENDIX B
Ai9
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
June 27, 1984
No. 81 Civ. 3000
a
SIERRA CLUB, The City Club of New York, Business for Mass
Transit, Committee for Better Transit, Inc., NYC Clean
Air Campaign, Inc., West 12th Street Block Association,
Hudson River Fishermen’s Association, Hudson County
Citizens for Clean Air, Seymour Durst, Otis Burger, Mary
Rowe, and Howard Singer, Plaintiffs,
—_V.—
UNITED STATES ARMY CORPS OF ENGINEERS, John Marsh, as
Secretary of the Army of the United States, Joseph K.
Bratton, as Chief of Engineers, Walter M. Smith, Jr., as
New York District Engineer of the United States Army
Corps of Engineers, William C. Hennessy, as Commis-
sioner of the New York State Department of Transporta-
tion, United States Department of Transportation, Andrew
L. Lewis, Jr., as Secretary of Transportation, of the United
States, Federal Highway Administration, Raymond A.
Barnhart as Administrator of the Federal Highway Ad-
ministration, The City of New York, Diefonitants.
and
CITY OF NEW YORK,
Defendant-Intervenor.
oe
Butzel & Kass by Albert K. Butzel, Mitchell S. Bernard, New
York City, for Plaintiffs.
Rudolph W. Giuliani, U.S. Atty. by Howard Wilson, Marc
H. Rosenbaum, New York City, for Federal Defendants.
A20
Kaye, Scholer, Fierman, Hays & Handler by Paul J. Curran,
Thomas A. Smart, Kelley J. Newton, New York City, for State
Defendant-Intervenor.
++
OPINION
GRIESA, District Judge.
Plaintiffs have applied for an award of attorneys’ fees and
disbursements.’ The application is made against all defendants
except the defendani-intervenor, City of New York.
Defendants fall into three categories—(1) the United States
Army Corps of Engineers and certain officials connected with
the Corps; (2) the Federal Highway Administration, the United
States Department of Transportation and certain officials con-
nected with those agencies; and (3) William C. Hennessy, who
was Commissioner of the New York State Department of
Transportation at the relevant times. These groups of defen-
dants will sometimes be referred to as the “Corps defendants,”
the “FHWA defendants,” and the “State defendant.”
Plaintiffs assert two grounds for the award they seek.
First, plaintiffs seek to recover against all defendants
under the common law. In connection with the federal
defendants, plaintiffs rely upon a provision of the Equal
Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(b),
which in effect waives sovereign immunity as to the
United States and its agencies and officials in an applica-
tion for attorneys’ fees and expenses under the common
law.
Second, they seek to recover against the Corps defen-
dants and the FHWA defendants under another provision
of the EAJA, 28 U.S.C. § 2412(d), which allows recovery
of attorneys’ fees and other expenses by a prevailing party
l The application is actually made on behalf of four of the twelve
plaintiffs. Apparently only these four have made any payments of fees
or disbursements to plaintiffs’ attorneys.
A21
against the United States in a civil action, other than a
tort action, unless the court finds that the position of the
United States “was substantialiy justified or that special
circumstances make an award unjust.”
Summary of Rulings
The court concludes that plaintiffs are entitled to recover
certain amounts for attorneys’ fees and disbursements under
the common law. As will be explained, certain issues were tried
and appealed regarding which the defendants who were in-
volved had no colorable basis for their positions. Attorneys’
fees are awarded in the amount of $261,205 plus disbursements
of $29,C49, or a total of $290,254. This entire amount is
assessed against the State defendants. However, for reasons io
be described, the various federal defendants are only liable for
part of this sum. The Corps defendants are liable for $155,870
fees and $21,245 disbursements, or a total of $177,115. The
FHWA defendants are liable for $76,335 fees plus $5,004
disbursements, or a total of $81,339.
Plaintiffs’ application under 28 U.S.C. § 2412(d) is denied.
Although plaintiffs were prevailing parties on the major issue
in the litigaiion and the court finds that on this issue the
positions of the federal defendants were not substantially
justified, it appears that plaintiffs include a person whose net
worth exceeds $1,000,000. Therefore, recovery under this stat-
utory provision is precluded by 28 U.S.C. § 2412{d)(2)(B).
The Proceedings
The relevant proceedings in this litigation are described in
the following opinions: Action for Rational Transit v. West
Side Highway Project, 536 F.Supp. 1225 (S.D.N.Y. 1982);
Sierra Club v. United States Army Corps of Engineers, 541
F.Supp. 1367 (S.D.N.Y. 1982); Sierra Club v. United States
Army Corps of Engineers, 701 F.2d 1011 (2d Cir. 1983).
The first of the above captions was handed down on March
31, 1982. This opinion actually dealt with two actions, Action
for Rational Transit v. West Side Highway Project, and Sierra
A22 —
Club v. United States Army Corps of Engineers. Part of the
opinion contained rulings dismissing the Action for Rational
Transit case on motion. The present fee application does not
relate to that action or these rulings.
The March 31, 1982 opinion also dealt with the Sierra Club
action, in which the present fee application is made. That
opinion confirmed that a number of the claims made by
plaintiffs had been dismissed on motion. However, a trial (“the
first trial”) had been held on plaintiffs’ claim regarding alleged
violations of law by the Corps defendants and the State
defendant in regard to the impact of Westway on fisheries and
the alleged improper grant of a landfill permit by the Corps to
the State. In the March 31, 1982 opinion the court nullified the
landfill permit subject to further administrative proceedings.
There was a second trial dealing with the fisheries issues as
they related to funding approvals granted by FHWA to the
State. The June 30, 198Z opinion nullified the basic funding
approvals, again subject to further administrative proceedings.
The various parties appealed and cross-appealed. The Corps
defendants and the FHWA defendants did not appeal from the
basic rulings of the district court on the merits, although they
appealed in respect to certain terms of the judgments. The
State defendant appealed on the merits. The Court of Appeals
affirmed the district court decision in all essential respects as to
the merits, although it reversed on certain of the points related
to the terms of the judgments.”
Plaintiffs’ application for attorneys’ fees and disbursements
was originally made on May 12, 1982. A number of events
occurred which caused the decision on the fee motion to be
deferred, including the second trial, the appeal, litigation in
1982 and 1983 regarding design and engineering activity during
the further administrative proceedings, and unsuccessful ef-
forts to resolve the fee application by settlement.
Moreover, in January of this year the court determined that
the various papers submitted on the motion, while extensive,
2 An injunction by the district court prohibiting federal reimburse-
ment for acquisition of certain right-of-way was reversed in a separate
opinion. Sierra Club v. Hennessy, 695 F.2d 643 (2d Cir. 1982).
A23
did not satisfactorily address the issues. Consequently the
court requested new briefs.
Legal Standard Under the Common Law
What is referred to as the normal American Rule is that the
prevailing party in a litigation may not recover his attorneys’
fees from the loser. Normaily each litigant pays his own
attorneys’ fees. Alveska Pipeline Service Co. v. Wiiderness
Society, 421 U.S. 240, 245, 247, 257, 95 S.Ct. 1612, 1615, 1616,
1621, 44 L.Ed.2d 141 (1975). However, certain exceptions have
been recognized. In Vaughan v Atkinson, 369 U.S. 527, 82
S.Ct. 997, 8 L.Ed.2d 88 (1962), the Court held in an admiralty
action that the libellant, the prevailing party, was entitled to
recover counsel fees. The Court stated that such an award
should be considered as part of the damages, since respondents
had refused to honor an obligation to libellant which “was
plainly owed him.” The Court commented that respondents
had been callous and recalcitrant in their approach to libel-
lant’s claim, had failed to investigate it, and had committed a
willful and persistent default. /d. at 530-31, 82 S.Ct. at 999. In
F-D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 129, 94
S.Ct. 2157, 2165, 40 L.&d.2d 703 (1974), the Court stated:
We have long recognized that attorneys’ fees may be
awarded to a successful party when his opponent has
acted in bad faith, vexatiously, wantonly, or for oppres-
sive reasons, . . .
Vaugh=n v. Atkinson, supra, was cited as authority for this
proposition. The Supreme Court again discussed the various
exceptions to the American Rule in A/yeska, supra, citing
Vaughan and quoting the language from F.D. Rich about an
award of attorneys’ fees being proper where the losing party
has “acted in bad faith, vexatiously, wantonly, or for oppres-
sive reasons.” 421 U.S. at 258-59, 95 S.Ct. at 1622.
The “bad faith” exception to the American Rule can apply
to either pre-litigatiou bad faith or to conduct in the course of
the litigation. In Hal! v. Cole, 412 U.S. 1, 15, 93 S.Ct. 1943,
195i, 36 L.Ed.2d 702 (1973), the Court stated:
A24
It is clear, however, that ‘’bad faith” may be found, not
only in the actions that led to the lawsuit, but also in the
conduct of the litigation.
It is obvious that bad faith conduct by a party prior to
litigation may be part of a pattern of misconduct which carries
forward into the litigation. However, it is the law that a party’s
bad faith, either prior to or during the litigation, may be the
basis for an award of attorneys’ fees under the common law
rule. In the Second Circuit, Class v. Norton, 505 F.2d 123 (2d
Cir. 1974), and Stolberg v. Board of Trustees, 474 F.2d 485 (2d
Cir. 1973), were cases where the court awarded attorneys’ fees
to the successful plaintiffs on the ground that willful violations
of obvious rights of the plaintiffs had required the bringing of
unnecessary lawsuits. See also Republic of Cape Verde v. A &
A Partners, 89 F.R.D. 14 (S.D.N.Y. 1980).
Certain leading Second Circuit decisions illustrate how the
bad faith rule is applied to conduct occurring during litigation.
In Browning Debenture Holders’ Committee v. DASA Corp.,
560 F.2d 1078 (2d Cir. 1977), the district court had awarded
attorneys’ fees to the defendant on the basis that the action
was commenced in bad faith and also on the basis that the
attorney for some of the plaintiffs had acted in bad faith in
taking certain procedural steps during the litigation. The court
of appeals reversed the award of fees on the basis of the
improper commencemeni of the action, holding that, under the
uncertain state of the law as it existed when the action was
instituted, the claim was a colorable one. The court stated (p.
1088):
An action is brought in bad faith when the claim is
entirely without color and has been asserted wantonly, for
purposes of harassment or delay, or for other improper
reasons.
However, the court held that the attorney’s procedural bad
faith might be the basis for a limited award of attorneys’ fees,
and remanded the case for specific findings on this issue.
A25
In Nemeroff v. Abelson, 620 F.2d 339 (2d Cir. 1980), the
district court had been presented with a motion by the defen-
dants to assess attorneys’ fees against plaintiff and plaintiff’s
attorneys for bad faith commencement of the action and
improper conduct during the litigation. The district court had
assessed attorneys’ fees on the first ground, but had made no
finding regarding the second. The court of appeals reversed the
award, holding that the action was commenced in good faith,
and remanded the case to the district court for a determination
of the propriety of the conduct of plaintiff and his attorneys
during the litigation. The decision contains a discussion of the
normal American Rule regarding attorneys’ fees and the vari-
ous exceptions, including the bad faith exception. The court
Stated:
Browning Debenture Holders’, supra, clarified the re-
quirements for a finding of bad faith in this Circuit. We
held that there must be “clear evidence” that the claims
are “entirely without color and made for reasons of
harassment or delay or for other improper purposes.” 560
F.2d at 1088 (emphasis added). In the instant case we find
it unnecessary to reach the question of the motives of
Nemeroff or his counsel, for we hold that the claims were
not “entirely without color” at the time the action was
commenced.
A claim is colorable, for the purpose of the bad faith
exception, when it has some legal and factual support,
considered in light of the reasonable beliefs of the individ-
ual making the claim. The question is whether a reason-
able attorney could have concluded that facts supporting
the claim might be established, not whether such facts
actually had been established.
620 F.2d at 348. Upon remand, the district court held that,
although the action was commenced in good faith, at a certain
point it became clear that there was no colorable basis for the
plaintiff’s claims and that thereafter the suit was continued in
bad faith. The district court also held that plaintiff's attorneys
prosecuted the case in an intentionally dilatory fashion. The
A26
court of appeals affirmed the attorneys’ fee award on the first
ground and did not reach the second ground. Nemeroff v.
Abelson, 704 F.2d 652 (2d Cir. 1983).
It should be noted that the discussions by the Second Circuit
regarding bad faith claims asserted by a plaintiff have been
applied to bad faith defenses asserted by a defendant. Republic
of Cape Verde v. A & A Partners, 89 F.R.D. 14 (S.D.N_Y.
1980).
In the present case, plaintiffs contend that they are entitled
to an award of attorneys’ fees against all defendants under the
above authorities. They do not contend that the Corps defen-
dants were guilty of pre-litigation bad faith, but they do make
such a contention against the FHWA defendants and the State
defendant. Plaintiffs claim that all defendants acted in bad
faith in the litigation.
Although the ensuing discussion will cover events both
before and during the litigation, it is necessary to start with a
description of the issues raised by the parties in the litigation.
Factual Findings on Common Law Claim
The present suit was commenced in March 1981. It was
originally brought against the Corps defendants and the State
defendant. Plaintiffs claimed that the Corps had failed to issue
a proper environmental impact statement (“EIS”) in connec-
tion with the State’s landfill application for Westway, that the
Corps had failed to give due consideration to environmental
factors, and that the issuance of the landfill permit was not in
compliance with the law. Plaintiffs raised the fisheries issue as
well as a number of other issues. All the non-fisheries claims
were dismissed on motion in November 1981. However, it was
determined that a trial would be necessary on the fisheries
issue.
On the latter issue, plaintiffs’ case rested largely upon the
alleged inadequacy of an EIS which had been issued by FHWA
and the New York State Department of Transportation (“NYS-
DOT”) in January 1977. This EIS had been relied upon by the
Corps to fulfill its responsibility under the National Environ-
A27
mental Policy Act (“NEPA”), 42 U.S.C. §§ 4321 et seg. The
January 1977 EIS and an accompanying water quality report
had described the proposed landfill area, known as the inter-
pier area, as “biologically impoverished” and as a “biological
wasteland.” These documents indicated that there was no fish
life of any significance in the interpier area. Plaintiffs claimed
that these descriptions were incorrect and that indeed, prior to
issuing the landfill permit, the Corps had obtained the results
of a fish study, conducted by Lawlor Matusky & Skelly at the
behest of the State in 1979-80 (“LMS study”), which showed
that the interpier area was a habitat for a variety of fish,
particularly young striped bass. Plaintiffs claimed that the
Corps violated NEPA in failing to issue a Supplemental En-
vironmental Impact Statement (“SEIS”). Plaintiffs further
claimed that, in considering the landfill permit application, the
Corps gave no proper consideration to the fisheries informa-
tion.
For purposes of analysis, it must be borne in mind that, in
connection with the landfill permit application, the Corp’s
responsibilities included compliance with two statutes—/.e.,
NEPA and section 404 of the Clean Water Act, 33 U.S.C.
§ 1344. As stated, the EIS obligation arose under NEPA. The
Clean Water Act required the Corps to give notice of the
landfill permit application, hold hearings, make its assessment
of the impacts of the project in relation to the public interest,
and create a reasoned admi: istrative record for its decision.
See 701 F.2d at 1031-33.
At the trial, the Corps conceded that the LMS study had
produced different information from what was contained in
the January 1977 EIS. However, the Corps defendants took the
position that the LMS study had not altered the conclusion of
the January 1977 EIS—i.e., that the landfill would not have a
significant impact on the overal/ striped bass resources of the
Hudson River. On this basis, according to the Corps defen-
dants, the Corps made a valid exercise of discretion in deciding
not to issue an SEIS. Also, the Corps defendants took the
position at trial that the Corps had properly considered the
fisheries issue, including the LMS data, in connection with its
A28
public interest review under the Clean Water Act. The Corps
defendants’ Trial Memorandum of January 15, 1982 summa-
rized their argument (p. 2):
The Army Corps expressly and carefully addressed the
very issue now relied upon by the plaintiffs as their last
remaining challenge to the Westway project [the fisheries
issue]. The Corps, after considering the LMS study, which
specifically addresses the issue of striped bass overwin-
tering,* as well as the comments of NMFS, FWS and EPA
and members of the public . . . concluded that there
would not be a significant impact on the overall striped
bass resources of the Hudson River.
The asterisk in the above quotation referred to the foilowing
footnote:
Volume I of the LMS study, at page 4.0-17, concludes
that:
For the striped bass population, the project area appears
to represent one of many available habitats that various
portions of the population occupy during the winter
months in years when temperatures are mild and condi-
tions are favorable.
At a later point the Trial Memorandum stated (p. 9):
In this case it is beyond question that the Army Corps
squarely considered the factors relevant to its decision on
whether to supplement. Those factors included the inten-
sity of striped bass overwintering in the winter of 1979-80,
and the availability of other habitats. Moreover, the
Corps submits that it was fully correct in its conclusions
regarding the availability of other habitat, and most
certainly did not make the “clear error of judgment”
which alone could justify this Court in concluding that
the Corps was arbitrary or capricious.
The State defendant made basically the same defense—i.e.,
that the LMS data did not alter the conclusion reached in the
A29
EIS about the effect of the landfill on overall Hudson River
productivity. Pretrial Memorandum pp. 10-11. The State de-
fendant also relied heavily on the conclusion of the LMS report
that the interpier area is one of “many available habitats” for
the overwintering of striped bass. Pretrial Memorandum p. 6.
The first triai took place January 19 to February 1, 1982.
Before discussing the evidence at that trial, the events leading
to the second trial will be summarized.
The March 31, 1982 opinion contained extensive findings to
the effect that the data developed in the LMS study of 1979-80
so seriously undercut what had been stated in the January 1977
EIS about the absence of fish life in the interpier area that it
was improper for the Corps not to issue an SEIS. The court
further found that the Corps failed to give due consideration to
the fisheries data in connection with its public interest review.
Since the FHWA defendants had not yet been brought into the
action, there were no findings of violation of law as io those
defendants. However, the March 31, 1982 opinion had obvious
implications as to FHWA, which had signed the January 1977
EIS. The court noted in the opinion that there would need to
be consideration as to whether the injunction to be entered
should cover FHWA. 536 F.Supp. at 1229.
Subsequently, the complaint was amended to include the
FHWA defendants. Plaintiffs announced that they would rest
on the existing record in connection with their claims against
FHWA. However, the FHWA defendants asserted that there
were new issues requiring trial, and the State defendant agreed.
The FHWA defendants set forth their defenses in an Offer of
Proof dated May 11, 1982. They asserted basically the same
defense which had been posed by the Corps defendants in the
first trial—i.e., that the LMS data did not change the conclu-
sion in the January 1977 EIS that the landfill would not
significantly damage Hudson River fisheries. The State defen-
dant took the same position. It may well seem puzzling that
these defendants pressed the very contention which had been
rejected by the court following the first trial. However, the
FHWA defendants and the State defendant urged that argu-
ments about the conduct of FHWA and its funding approvals
were not precluded by the findings as to the Corps.
A30
Following the second trial, the court issued its June 30, 1982
opinion, which found that FHWA had violated NEPA in
respect to the fisheries issue, and that misconduct on the part
of the State had contributed to this violation.
We now come to the specific question presented by plain-
tiffs’ application for attorneys’ fees. This question is not
whether defendants were wrong on the merits, but whether
their defenses were asserted in bad faith within the meaning of
the authorities cited above. Were these defenses “entirely
without color and made for reasons of harassment or delay or
for other improper purposes”? Or did the defenses have “some
legal and factual support, considered in light of the reasonable
beliefs” of the parties posing them?
A circumstance should be noted here, which is obvious but
nevertheless important to bear in mind. By the time the defense
positions were laid out, the various defendants were in full
command of the relevant facts. The Corps defendants and
their counsel knew exactly what they had done and had not
done in connection with the Westway matter. The same is true
for the FHWA defendants and the State defendant. Each group
of defendants was in a position, prior to the commencement of
the trial involving the particular defendants, io know positively
whether the defenses asserted had a reasonable degree of merit
or not.
The First Trial
As described earlier, the first trial involved the issue under
NEPA as to whether the Corps had made a valid exercise of
discretion in not issuing an SEIS, particularly in view of the
LMS data. There was also the issue under the Clean Water Act
as to whether the Corps adequately considered the fisheries
issue in its public interest review. Although the trial focused to
a large extent upon the processes of the Corps, the State
defendant was intimately involved with the issues and was, of
course, critically interested in the outcome, since plaintiffs
were seeking to void the landfill permit granted by the Corps to
the State.
A31
In considering the materials set forth below it is well to keep
in mind the position of the Corps that it “expressly and
carefully addressed” the fisheries issues, and that it “squarely
considered” the relevant fisheries factors in “its decision on
whether to supplement.” Another argument central to the
position of all defendants throughout both trials was that
despite the new information presented by the LMS report,
which contradicted the factual description in the January 1977
EIS, nevertheless the LMS data did not change the conclusion
of the January 1977 EIS that the landfill would have little
impact on the overall productivity of the Hudson River.
The following is a summary of the pertinent evidence at the
first trial, and the findings of the district court and the court of
appeals.
The landfill application was before the district engineer (the
first of the three tiers of review in the Corps) for 22 years—
from April 1977 until September 1979. The Corps announced
in April 1977 that the January 1977 EIS, which had been issued
by FHWA and NYSDOT, would be regarded as adequate for
the purposes of the Corps. 701 F.2d at 1021. Soon after this,
the district engineer commenced receiving objections to the
granting of the landfill permit from the National Marine
Fisheries Service (“NMFS”) and the Fish and Wildlife Service
(“FWS”), and received a request from the Environmental
Protection Agency (“EPA”) to conduct a more thorough study
regarding fisheries. The district engineer passed these com-
ments on to NYSDOT. However, the district engineer took no
action to make any study of fish life in the interpier area.
EPA prevailed upon NYSDOT to have such a study per-
formed, and the result was the LMS study. The work by LMS
was carried out from April 1979 to April 1980. In September
1979, without waiting for the LMS study to be completed, the
district engineer recommended that the landfill permit be
issued. In connection with the fisheries question, the district
engineer’s report merely reiterated the material contained in
the January 1977 EIS. The report noted the ongoing study
being made by LMS, but concluded that the information from
this study would not be necessary for decision on the Westway
A32
landfill matter. The district engineer made the specific finding
that no SEIS was required.
The evidence at the first trial was “a virtual blank” as to
what the district engineer and his staff did by way of consider-
ation of the critical issues. 536 F.Supp. at 1241. The district
engineer did not testify.
There was no colorable basis for any claim that the district
engineer “expressly and carefully addressed” the fisheries is-
sues, or that he in any way fulfilled the obligations imposed by
NEPA and the Clean Water Act.
From September 1979 until January 1981 the Westway land-
fill application was before the division engineer. This was an
important phase of the proceedings, since the LMS report was
received by the Corps in September 1980. The net result of the
various events which occurred during this period of time was
that the division engineer declined to issue an SEIS (although
requested to do so by EPA and also by the Sierra Club) and
recommended issuance of the landfiil permit.
The court of appeals quoted with approval from the March
31, 1982 district court opinion:
The most significant environmental impact requiring
consideration by the Corps of Engineers was the impact
of the proposed landfill on fishery resources.
After the [Lawler] report was obtained, at the instance of
the other agencies, the invalidity of the conclusions in the
January 1977 EIS regarding aquatic impact was proved.
The interpier area was shown to be a highly significant
and productive habitat for fish, including striped bass.
701 F.2d at 1024-25. The court of appeals added its own
finding, in comparing the decision of the division engineer with
that of the district engineer:
The division engineer’s decision was at least equaily
flawed. By the time that decision was rendered, the
Lawler report had been received, and it confirmed the
criticisms of the objecting federal agencies and revealed
A33
the inaccuracy of the FEIS’s conclusion that the interpier
area was a biological-wasieland. Nonetheless, the division
engineer, like the district engineer, merely forwarded all
federal agency criticisms of the FEIS to NYSDOT and
FHWA, and had no independent Corps study made of the
questions raised.°
701 F.2d at 1032.
Again, the question is not whether the Corps won the case
on the merits (which it obviously did not), but whether the
position of the Corps was so wholly lacking in merit that it
could not be asserted in good faith. This brings us back to the
contention of the Corps that it expressly, carefully and squarely
reviewed the fisheries issues, and that such review was the basis
of its decision, or exercise of discretion, in not issuing an SEIS,
and also the basis of the decision to grant the landfill permit.
As far as the administrative record is concerned, there is an
absolute void as to any indication that the division engineer
made this kind of reasoned consideration or decision or exer-
cise of discretion. The recommendation of the division engi-
neer was contained in a report dated January 16, 1981. This
report avoided any discussion of the LMS striped bass data
and the magnitude of the findings of striped bass in the
interpier area. This recommendation was preceded by a staff
report prepared in the division office in November 1980. The
staff report was similarly blank on the subject of the striped
bass and the issues raised by the LMS report. 536 F.Supp. at
1250-51.
As to testimony, there was none from the division engineer,
nor was there any testimony by any member of his “Westway
Committee.” Instead, the Corps called two biologists who had
participated in the Westway matter at the division level—Linda
Monte and Robert Pierce. Monte was the junior of the two.
She had been employed by the district engineer while the
Westway application was in the district office, and was as-
3 The court of appeals referred to the January 1977 EIS as the
“FEIS”—Final Environmental Impact Statement.
A34
signed to the division in November 1979. She worked on the
Westway matter until she took maternity leave in November
1980. She drafted the material regarding aquatic impacts in the
November 1980 staff report and in the January 16, 1981
division engineer’s report.
Monte’s testimony is remarkably lacking in content. She met
at times with General Lewis, the division engineer, and at times
there were meetings involving Lewis, Pierce and Monte. No
notes or records were kept of those meetings. Monte testified
that Lewis was “very thorough . . . very interested” in the
Westway project, and that he received briefings on the fisheries
issue (Tr. 1133-34). After the LMS report arrived, Lewis,
Pierce and Monte “discussed all of the fish that were using that
area, and that included the striped bass” (Tr. 1138). They
discussed “all of the parameters in the LMS Report” (Tr.
1146). On cross-examination Monte was asked what was said
in these discussions of “all the fish” and “all of the parame-
ters.” Her answers did not show any discussions of substance
on the critical issues. For instance, she did not recall any
detailed discussion of the problems of overwintering striped
bass (Tr. 1220-22).
Monte could not recall whether she did or did not make a
recommendation on the question of whether to issue an SEIS
(Tr. 1186).
It is true that Monte testified that she made an “impact
analysis,” and did not find that, based on the information
received, the elimination of the interpier area would affect the
Hudson River fisheries in an “unacceptable manner.” She
believed that the impact of the project would be “minor” (Tr.
1186). She further testified that “we” (meaning herself, Pierce
and Lewis) “concluded that it wouldn’t have an unacceptable
impact on the fisheries of the Hudson River” (Tr. 1146). See
also Tr. 1231-32. The trouble is that there is no evidence
whatever that these conclusions were based on anything like a
detailed and systematic analysis. There is no evidence that
Monte was even assigned to make such an analysis. For
instance, Monte testified that she believed that there were
adequate areas in the Hudson River, apart from the interpier
A35
area, where the young striped bass could overwinter (Tr. 1150,
1201-2, 1214). This belief was the foundation for her conclu-
sion that the landfili would cause only a minor impact. How-
ever, Monte did not do any statistical analysis to arrive at her
belief. She did not even take the LMS data and try to compare
the contribution of the interpier area as a habitat with the rest
of the estuary (Tr. 1222-23).
Monte testified that, in addition to the LMS data, the Corps
had certain other information about striped bass habitats in
the Hudson River. However, the figures in these other sources
of information could not be compared directly with the LMS
data, and this other material merely gave an “overall impres-
sion” (Tr. 1202). Moreover, even in connection with this overall
impression, Monte did not actually look at the sources (Tr.
1229).
Pierce’s testimony was even less supportive of the position
of the division engineer. He was a biologist in the division
office, and was a consultant to the Westway Committee and to
Lewis. He came to the conclusion that the techniques used in
arriving at the presentation in the January 1977 EIS were
faulty (Tr. 1240). At some point, (presumably as a result of the
LMS data) Pierce concluded that the interpier area played a
normal role as part of the Hudson River estuary in the
production of fish, and he so advised Lewis (Tr. 1246). Pierce
expressed to Lewis a concern as to what the loss of the
interpier area would do to the “carrying capacity” of the
Hudson River in regard to fish production, and recommended
to Lewis that the Westway landfill permit be denied (Tr.
1247-48).
However, Pierce was not assigned to make any detailed
analysis of the LMS findings. He was not asked to undertake
any professional assignment with regard to the striped bass. It
was Monte, and not Pierce, who drafted the sections of the
staff report and the division engineer’s recommendation re-
garding fisheries. |
Pierce testified as to no discussions or considerations on the
question of whether to issue an SEIS.
A36
After the division engineer had made his recommendation,
the Westway matter went to the chief of engineers. Neither the
chief, nor the assistant who worked with him on the matter,
testified ai the trial. A biologist in the chief’s office, Dr. Hall,
testified that he had reviewed the matter and had written a
memorandum commenting on the “significance of the [inter-
pier] area as habitat” for striped bass. There is no evidence
that the chief of engineers consulted with Hali or did anything
other than rely upon the recommendation of the division
engineer.
The court of appeals quoted with approval the finding of the
district court that, “The total failure of the Corps to comply
with [its] obligations has been demonstrated beyond any ques-
tion.” 701 F.2d at 1011. The court of appeals also noted the
“surprising dearth of evidence as to the nature and substance
of the Corps’s investigations and deliberations.” /d. The court
specifically commented on the failure of any of the responsible
Corps officials to testify. Id.
Under ail of the circumstances, it must be concluded that
there was no basis for saying that the Corps “expressly and
carefully addressed” the fisheries issue vis a vis its statutory
obligations. There was no testimony whatever in the first trial
as to any deliberation or any exercise of discretion or the
making of any decision on the question of whether to issue an
SEIS to correct the misinformation contained in the January
1977 EIS.
Both the Corps defendants and the State defendant argued
at the trial that the Corps was entitled to rest on the January
1977 EIS and not issue an SEIS, because the LMS data did not
change the conclusion that overall Hudson River fish produc-
tivity would not be harmed. However, no witness from the
Corps ever testitied as to this line of reasoning. One can well
understand why.
In the first place, the argument is based on a fallacious legal
premise. We are not talking about an uncertain area of the law
or a novel legal proposition. We are dealing with a clear and
well-settled requirement under NEPA. If a proposed project
will result in the destruction of a significant amount of forest
A37
or park land or wetlands or fisheries habitat, then that in/for-
mation must be stated in the EIS; it is not sufficient to merely
state someone’s conclusion that the overall forestry or park or
wetlands or fishery environment in some broad area will not be
unduly affected. A reading of the court of appeals opinion in
the present case is sufficient to show that the requirement of
NEPA is for the disclosure of relevant information. 701 F.2d at
1029-30. Of course, the January 1977 EIS provided what was
represented to be correct information as a back-up to its
conclusion regarding aquatic impact. When that information
was proven to be wrong (not in some small detail but grossly
wrong), the law required the Corps to supplement and correct
the misinformation. The applicable regulation governing sup-
plementation provides that an SEIS should be prepared where
there are “significant new circumstances or information rele-
vant to environmental concerns .. . .” 40 C.F.R. § 1502.9
(c)(1)(ii).
Thus there was no basis whatever for the argument that the
Corps’s NEPA obligation related solely to some alleged conclu-
sion regarding overall Hudson River productivity.
Even from a factual standpoint, the purported conclusion
had some serious problems. Its basis was said to be the
language in the LMS report, quoted in the Corps defendants’
Trial Memorandum as described above, that the interpier area
“represents one of many available habitats” for striped bass.
LMS Report p. 4.0-17.
In the March 31, 1982 opinion, the court found that the
LMS report had two aspects. First, the report was sufficient to
apprise the Corps of the significance of the interpier area as a
Striped bass habitat, as demonstrated by, among other things,
the memorandum of Corps biologist Hall specificaily referring
to “the significance of the area as habitat.” 536 F.Supp. at
1247. Second, some phases of the LMS study were misleading
and attempted to avoid the full impact of the facts revealed in
the study. Specifically, the conclusion about “one of many
available habitats” was misleading because it attempted to give
the impression that the interpier area was one of many habitats
more-or-less equal in importance and productivity, whereas the
A38
data gathered by LMS showed that, except for a New Jersey
site across the river, the abundance of striped bass found in the
interpier area was enormously greater than that found in any
other location sampled. 536 F.Supp. at 1247-48. The court of
appeals found that the LMS data were not fully disclosed in
the LMS report, and that the Westway Project* officials knew
this, although the Corps may nor have known of this at the
time. 701 F.2d at 1023 n. 12 and 1046-47.
In this connection the court of appeals was dealing with the
issue of whether the parties were in bad faith at the time of the
events in question.© However, by the time of the first trial all
the parties and their attorneys had been able to analyze the
LMS report and its conclusions fully. There is little excuse for
defendants putting forth the conclusion about striped bass in
the LMS report as representing a scientific judgment upon
which they were entitled to rest their position. Moreover, as the
court of appeals specifically found, the State’s representatives
had known of the misleading nature of the LMS report from
the start.
In any event, despite differences in the degrees of knowledge
of the Corps and the State at the time of the events, the Corps
possessed a sufficient body of information from the LMS
study so that it knew or, with the slightest bona fide considera-
tion, should have known that there was “significant
information” within the meaning of the applicable regulation,
which required the issuance of an SEIS. No one from the
Corps came to the witness stand and testified, “I considered
the LMS report and decided that it was not significant infor-
mation.” Such testimony would have been outlandish. Indeed,
the only way defendants were able to give the appearance of
having a valid defense was to phrase the issue in a way that
veered off from the law and to make use of a spurious
“conclusion” in the LMS report.
4 There was an administrative entity called the “Westside Highway
Project” (referred to in the various opinions as “the Westway Project”
or “the Project”) under the jurisdiction of NYSDOT.
5 This issue arose in the court of appeals’ review of the district court's
appointment of a special master. The appointment was reversed.
A39
The court concludes that the defenses asserted by the Corps
defendants and the State defendant at the first tria! were
entirely without color. The positions asserted by defendants
were ones which they totally failed to support in law and in
fact. As to the motives of defendants (see Nemeroff v.
Abelson, 620 F.2d at 348), it must be concluded that the
defenses were asserted for an improper purpose. To occupy
one’s opponents and the court in meritless and fruitless litiga-
tion is an illegitimate endeavor for which there is no proper
purpose.°
The Second Trial
As described earlier, the second trial resulted from the fact
that, following the March 3!, 1982 opinion, the complaint was
amended to bring in the FHWA defendants. Plaintiffs claimed
that the January 1977 EIS, signed by NYSDOT and FHWA,
was inadequate, in regard to fisheries, when issued, and that in
any event the LMS data made it necessary for FHWA to issue
an SEIS.
In connection with the present fee application, the FHWA
defendants and the State defendant assert that no second trial
would have been necessary if plaintiffs had included the
FHWA defendants in their original complaint, and that they
should have done so.
6 At the end of the first trial | remarked that | thought that there was
“an honest conflict” and that the witnesses had been “remarkably
candid” (Tr. 1496). I have no reason to depart from my statement
about the impression the witnesses made. However, the conclusions to
be drawn from an analysis of their testimony are something else again.
As to my statement about there being an “i,onest conflict,” that
impression was not, of course, a finding of fact, ond it kas ouviously
been superseded by the findings I have made upon afi ciia!ysis of the
evidence and the law. This process illustrates the fact that there may be
cases in which, because of the subject matter or for other reasons, a
party to a litigation can appear to create difficult issues, which require
a considerable effort on the part of the court to deal with. However,
there are times when, after all the arguments and the evidence are
sorted out, it becomes apparent that there was no legitimate basis for
certain claims or defenses and no bona fide reason for occupying the
court with the matter. Such is the case here.
eee
A40
The court has voiced some criticism of plaintiffs for not
including the FHWA defendants in the case from the outset.
However, upon an analysis of the record, the court concludes
that the total amount of trial time was not appreciably in-
creased because there were two trials instead of one. Each trial
involved different phases of the activities of the federal agen-
cies and the State.
At the second trial plaintiffs rested on the record of the first
trial. However, both the FHWA defendants and the State
defendant presented an extensive case. In connection with the
State’s witnesses, it is necessary to note that the State had acted
in Westway matters through NYSDOT, which had in turn acted
largely through an administrative entity known as the
“Westway Project” (see footnote 4). The Westway Project
employed various consulting firms, the principal one of which
was Systems Design Concept, Inc. (“Sydec”). The State called
witnesses from NYSDOT itself and also from the Project and
Sydec.
As to the question of the aucquacy of the January 1977 EIS
when issued, the district court found in its June 30, 1982
opinion that there was no basis for the conclusion put forth in
the EIS and the accompanying water quality report that the
interpier area was a “biological wasteland” and was “biologi-
cally impoverished,” and found that the authors knew or
should have known of the lack of factual basis. 541 F.Supp. at
1371-72. In affirming, the court of appeals referred to the
“baseless and erroneous factual conclusion” of the January
1977 EIS, 701 F.2d at 1034, the “cavalier manner in which the
Project had reached its conclusion” and the fact that there was
“no evidence that FHWA made any independent evaluation
whatever of the fishéries issues” in connection with the Janu-
ary 1977 EIS. /d. at 10314. See also id. at 1046.
However, the question ofthe effect of the later LMS data
and whether this data required an SEIS was the subject of the
bulk of the testimony offered by defendants at the second trial.
Witnesses from FHWA and the State admitted that at least by
the time of the receipt of the LMS data they knew that the
conclusions presented in the January 1977 EIS were based on
A4l
faulty investigative techniques. 541 F.Supp. at 1371-72. The
LMS data showed a wholly different set of facts from what
was set forth in the flawed 1977 EIS. It is difficult to under-
stand how there was even an arguable justification for FHWA
and the State not issuing a corrective SEIS. However, the
FHWA and State defendants put on a lengthy case at the
second trial on this issue.
The character of the defense evidence on this subject is
described in the June 30, 1982 opinion. The three principal
defense witnesses were Graham Bailey, Area Engineer for
FHWA; Lowell K. Bridwell, Executive Director of the Westway
Project from 1972 to 1981; and Joan Walter, an employee of
Sydec. The court described their testimony as follows:
In connection with the three principal defense witnesses—
Bailey, Bridwell and Walter—it is apparent that they have
not disclosed the facts in a full and candid fashion. The
testimony of these witnesses was characterized not only by
a striking lack of plausibility on critical points, but also
by a remarkable amount of inconsistency, evasion, and
asserted loss of memory On matters where memory would
be expected.
541 F.Supp. at 1372. The court of appeals had this description
of the testimony of the FHWA witnesses:
. . . faulty memories (perhaps conveniently blank, see
541 F.Supp. at 1372)...
701 F.2d at 1040-41.
The district court found that the LMS data, as gradually
obtained by the Project and FHWA prior to the issuarice of a
report by LMS, was a matter of “acute concern,” and that the
Project and FHWA responded with a “plan to delay the
issuance of the report by LMS, and to manipulate the presenta-
tion of this data in order to mask its full import.” 541 F.Supp.
at 1373. The court of appeals found that it was not so clear
that FHWA joined in the scheme to delay, and that- the
attribution of “full knowledge and scheming in the early
summer of 1980” to FHWA was contraindicated by other
A42
evidence. 701 F.2d at 1046. However, the court of appeals
stated that “the record amply suppc:is the district court’s
findings of bad faith on the part of the Project and its
officials,” and that FHWA proceeded in bad faith after a
meeting of August 20, 1980, at which time FHWA received the
“complete picture” about the significance of the interpier area
as a fish habitat from the Project and joined ranks with the
Project in preventing disclosure. Id. at 1046-47.’ The court of
appeals stated:
We also concur in the district court’s inference that the
Project’s machinations to avoid disclosure of the Lawler
data suggested that in the Project’s view the data were
highly significant rather than insignificant, and we agree
that the same inference is permissible as to FHWA’s
assessment of the data in light of its joining ranks with the
Project in preventing disclosure.
Id. at 1047.
The June 30, 1982 district court opinion contained a further
discussion, in addition to what had been described in the
March 31, 1982 opinion, regarding the misleading nature of
the LMS report. For the sake of the present motion the
following finding is significant:
At the very least, the method of presentation in that
report created a facade which could be used officially by
7 The State defendant, in its papers on the present motion, attached a
copy of certain materials relating to an investigation in the State of
Maryland as to the conduct of Bridwell in the Westway matter.
Bridwell is now Secretary of Transportation of Maryland. Among
other things, the State defendant argues that a panel report and the
Governor’s report take a somewhat different view of the events at the
August 20, 1980 meeting from what the district court found in the June
30, 1982 opinion. The Maryland materials are not a part of the record
in the present case. If administrative investigation reports were to be
considered, then it would be appropriate to include the June 1984
report of the State of New York Commission of Investigation entitled
The Westway Environmental Approval Process: The Dilution of State
Authority. However, it is the view of the court that the present motion
must be decided solely on the basis of the court record.
A43
the Project, the FHWA and the Corps of Engineers to
justify their various actions which are now in question.
Moreover, the spurious conclusions in the LMS report
about striped bass have been referred to over and over
again by defendants and their witnesses in this litigation
to support positions taken by them.
541 F.Supp. at 1378. The court of appeals agreed that the
Project knew that the LMS data “were not fully disclosed in
the Lawler report.” 701 F.2d at 1023 n. 12 and 1047.
Another pivotal event focused on at the second trial was the
October 9, 1980 letter from FHWA to the Corps. Previously
the Corps had received certain comments from EPA and the
Sierra Club to the effect that the January 1977 EIS was
inadequate and that an SEIS should be issued. The Corps
passed these on to FHWA for its views, which replied in the
letter of October 9, 1980. This letter took the position that an
SEIS was not necessary, that the LMS data did not lead to any
different conclusion from what was in the 1977 EIS, and that
the LMS data meant nothing more than—“fish use the area.”
The district court found that this statement, and the entire
description relating to fisheries in the October 9, 1980 letter,
were ‘simply fraudulent.” 541 F.Supp. at 1379. The court of
appeals referred to the letter as a “fraudulent characterization”
and a “blatant misrepresentation.” 701 F.2d at 1047.
There was evidence about the authorship of the October 9,
1980 letter, which the district court called “nothing short of
bizarre.” 541 F.Supp. at 1379-81. See also 701 F.2d at 1041. As
a result of a surprisingly difficult inquiry, it was finally es-
tablished that the relevant language in the letter was given by
the Project to FHWA. 701 F.2d at 1047.
Of course, aside from advising the Corps about whether the
Corps needed to issue an SEIS, FHWA needed to make a
decision on this subject in order to meet its own statutory
responsibility. Since FHWA had signed the January 1977 EIS
jointly with NYSDOT, presumably there would be some coor-
dination with the State on this subject. No authoritative person
from either FHWA or the State testified that he either made the
A44
decision not to issue an SEIS or recommended such a decision.
The district court concluded that the decision was made in a
manner none of the witnesses was willing to admit. 541
F.Supp. at 1379.
It is necessary now to determine what conclusions are to be
drawn from the facts developed at the second trial. There is
simply no escape from the conclusion that the authorized
representatives of the State and FHWA engaged in bad faith
conduct prior to the litigation. Moreover, it is the kind of
conduct which is most germane to an application for attorneys’
fees. Part of the activities of the State and FHWA consisted of
an attempt to create a record of purported scientific judgment
(e.g., the misleading conclusion in the LMS report) and pur-
ported agency discretion (e.g., the October 9, 1980 letter from
FHWA to the Corps.*). It is perfectly obvious that the intention
was to have this “record” available to forestall or rebut a
challenge to the agency action. This is exactly the use that has
been made of these materials. Defendants have relied heavily
on them for their defense in this litigation.
To be perfectly clear on the question of pre-litigation bad
faith, it should be repeated that both the district court and the
court of appeals found bad faith on the part of the State
during ihe entire time beginning with the receipt of the LMS
data. The district court found bad faith on the part of FHWA
beginning with the receipt of the LMS data. The court of
appeals felt that the bad faith of FHWA started with a precise
event—the August 20, 1980 meeting. This was, of course, prior
to FHWA’s October 9, 1980 letter.
As to the conduct of the FHWA defendants and the State
defendant in the second trial, the court finds that the defenses
they presented were entirely without color. By the time of this
8 In addition, FHWA and NYSDOT issued a document entitled
“Reevaluation” in 1981 purporting to review the question of whether
to supplement the January 1977 EIS. Of course, the decision not to
supplement was made in the summer and fall of 1980. The discussion
in the Reevaluation followed the pattern of the earlier documents in
presenting a wholly misleading discussion of the fisheries issue. 541
F.Supp. at 1382.
A4S
trial defendants knew that the fisheries material in the January
1977 EIS was not only false but had been based on a wholly
inadequate investigation of the facts.
Of course, the main claim made by plaintiffs at the second
trial was that, following the receipt of the LMS data, FHWA
had a duty to issue an SEIS. Most of the evidence related to
this issue. The attempt of both the FHWA defendants and the
State defendant to present defenses on this issue was lacking in
any colorable basis. Although defendants purported to come
forward with authoritative witnesses, in contrast to the first
trial, the results can only be described as disastrous.
We recognize that one of the main duties of a trier of the fact
in a lawsuit is to assess the credibility of witnesses. Surely it
would not be said that a claim or defense is entirely without
color every time some testimony is found to be untrue.
But the credibility problems at the second trial went far
beyond the usual or normal. They were extraordinary. At the
beginning of the third day of the second trial, the court
commented on the fact that the witnesses were not telling the
facts, but were merely stating positions; that witnesses were
skipping over large blocks of time and over important events.
The court commented on a witness who was quite obviously
following a “script” which he forgot, causing some difficulty
in his further testimony. The court urged that the defense
attorneys make every effort to see that witnesses obeyed the
oath (Tr. 262-65). Unfortunately, the serious credibility prob-
lems continued, as the record amply demonsirates.
This abnormal and extraordinary situation regarding the
lack of credibility of the defense witnesses reinforces the
conclusion that, at the second trial, defendants asserted posi-
tions which lacked any reasonable basis.
The Appeal
The federal defendants did not appeal from the district court
findings described above. However, the State defendant did
appeal these findings. Plaintiffs claim that the State’s appeal
was without colorable basis.
A46
The State defendant asserts that the district court cannot
properly determine whether attorneys’ fees should be awaided
for the appeal, and that this question should be addressed to
the court of appeals. However, Perkins v. Standard Oil of
California, 399 U.S. 222, 90 S.Ct. 1989, 26 L.Ed.2d 534
(1970), is to the contrary.
In the present case, the State defendant’s appeal from the
district court findings on the fisheries issue was merely a
further assertion of the baseless positions taken in the district
court. It is appropriate to include an award for the appeal in
the amount assessed against the State defendant.
Conclusions on Bad Faith Claim
For the foregoing reasons, the court concludes that plaintiffs
are entitled to an award of attorneys’ fees and disbursements
against the Corps defendants and the State defendant for the
assertion of bad faith defenses in the first trial. In connection
with the second trial, the court concludes that plaintiffs are
entitled to an award of aitorneys’ fees against the FHWA
defendants and the State defendant because of their bad faith
conduct both prior to and during the second trial. Plaintiffs
are entitled to an award against the State defendant in connec-
tion with the appeal. These awards are limited to the fisheries
issue.
Common Benefit Theory
Plaintiffs assert another giound under the common law.
They contend that this case falls within the common benefit
exception to the American Rule. Under this exception, a party
is entitled to recover attorneys’ fees where a suit confers a
substantia! benefit to members of an ascertainable class. Plain-
tiffs urge that the results of this litigation have benefited both
the taxpayers of the State of New York and of the United
States as a whole, and that an award of fees against the State
and against the United States will operate to spread the cost of
the litigation among all of these benefited persons. The com-
mon benefit rule does not apply to this case. The class must be
A47
finite and identifiable, and the rule does not apply to situations
where a plaintiff’s action has simply vindicated a general social
grievance. Boeing Co. v. Van Gemert, 444 U.S. 472, 478-79,
100 S.Ct. 745, 749, 62 L.Ed.2d 676 (1980); Alyeska Pipeline
Service Co. v. Wilderness Society, 421 U.S. 240, 267, 95 S.Ct.
1612, 1626, 44 L.Ed.2d 141 (1975).
Alternate EAJA Claim
Aside from the claims under the common law, plaintiffs seek
attorneys’ fees against the federal defendants under a provision
of the EAJA which allows recovery of fees and other expenses
to a prevailing party against the United States in a civil action,
other than a tort action, 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).
This provision was repealed effective October 1, 1984, but
applies to any action commenced before the date of repeal.
The term “party” in this provision is defined to mean,
among other things, an individual whose net worth did not
exceed $1,000,000 at the time the civil action was filed. 28
U.S.C. § 2412(d)(2)(B).
The court finds that all of the conditions for an award under
this provision are met, except that one of plaintiffs, Seymour
Durst, has a net worth exceeding $1,000,000. Plaintiffs argue
that Durst is not one of the plaintiffs making this application
for fees. Only four of the twelve plaintiffs are making the
application. See footnote 1. Also, it is asserted that there is an
agreement with Durst not to bill him for any fee and disburse-
ments.
However, Durst is a plaintiff. It would appear to be reason-
able to consider plaintiffs together for the sake of applying this
section of the statute. Since one of plaintiffs has a net worth
over $1,000,000, recovery is precluded under 28 U.S.C.
§ 2412(d).
Eleventh Amendment Defense
The Eleventh Amendment to the United States Constitution
provides that the judicial power of the United States does not
A48
extend to any suit in law or equity against a state by citizens of
another state. It has consistently been assumed that the sov-
ereign immunity of a state also applies to bar a suit against a
state by citizens of the same state. Great Northern Life Insur-
ance Co. v. Read, 322 U.S. 47, 64 S.Ct. 873, 88 L.Ed. 112]
(1944); Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed.
842 (1890).
However, it has been held that this doctrine does not bar a
suit in a federal court against a state official, acting in his
official capacity, where the suit is for injunctive relief. Ex parte
Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Also,
if injunctive relief is granted against the state official and if
there is ancillary monetary effect against the state treasury, the
Eleventh Amendment will not act as a bar. Edelman v. Jordan,
415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). The
Second Circuit has construed the latter doctrine to permit
recovery of attorneys’ fees when the award is incident to a
judgment granting prospective injunctive relief. See Gagne y.
Maher, 594 F.2d 336 (2d Cir. 1979), aff’d, 448 U.S. 122, 100
S.Ct. 2570, 65 L.Ed.2d 653 (1980).
The soundness of this rule is illustrated by the present case.
Although the suit was brought to attack the Corps of Engi-
neers’ decision to grant the landfill permit, and later the
FHWA’s decision regarding funding, the State of New York
had a crucial interest in the suit because it was the beneficiary
of the federal decisions. It was appropriate, and undoubtedly
necessary, for plaintiffs to join as a defendant the responsible
State official, the Commissioner of Transportation. The State,
through the Commissioner, took a most active role in the
litigation in defending the landfill permit and the funding.
There was never any question about the jurisdiction of the
court over the Commissioner and the right of the Commis-
sioner to participate in the case. However, the Commissioner
was bound to observe the rules and standards of conduct
applicable in a federal court. It necessarily follows that the
Commissioner should be subject to sanctions, including the
assessment of attorneys’ fees and disbursements, for failure to
observe these rules and standards.
A49
The Punitive Damage Argument
The State defendant argues that recovery of attorneys’ fees
on the basis of a finding of bad faith is barred because such an
award would in effect amount to a judgment for punitive
damages.
City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101
S.Ct. 2748, 69 L.Ed.2d 616 (1981), held that punitive damages
may not be awarded against a municipality in an action under
42 U.S.C. § 1983. The court recognized that municipal immu-
nity from punitive damages was a broadly applied doctrine. In
the present case, the State defendant argues that this rule
prevents him from being subject to an award of attorneys’
fees.
The dispositive point is that a judgment for attorneys’ fees
based on bad faith is not the same as the imposition of punitive
damages in a tort case. Such a judgment for fees arises from
policies designed to protect the judicial process from abuse.
Moreover, it has a compensatory character in respect to the
services performed by the winning party’s attorneys.
Amount of Award
As already described, plaintiffs’ suit raised a number of
issues in addition to the one concerning fisheries. The non-fish-
eries issues were disposed of on motion without trial in defen-
dants’ favor. Defendants clearly were not in bad faith on the
non-fisheries issues. Plaintiffs’ recovery of attorneys’ fees and
disbursements must be limited to the fisheries issue.
Plaintiffs’ attorneys have provided a breakdown showing
work on the fisheries issue, except in connection with the
appeal. As to the appeal, it can be safely estimated that at least
two-thirds of the time spent and of the disbursements related
to the fisheries issue.
As to the work of plaintiffs’ attorneys leading up to the two
trials and during the trials, the attorneys have furnished a
detailed description of the work carried out and the hours
spent on the fisheries issue. They have shown separately the
work in connection with the first trial against the Corps
ASO
defendants and the State defendant, and the work in connec-
tion with the second trial against the FHWA defendants and
the State defendant.
They have calculated amounts for each trial based on the
number of hours and standard hourly rates for the attorneys
involved. The rates are in all cases reasonable. The amount in
connection with the first trial is $155,870 plus disbursements of
$21,245. The latter figure includes $8,400 for an expert wit-
ness. The amount in connection with the second trial is $76,335
plus disbursements of $5,004. The amount for the appeal
(before deducting for non-fisheries issues) is $43,025. Plaintiffs
have also shown disbursements of $4,180 for the appeal and
certain other activities. Using the estimate of two-thirds for the
fisheries related work, the amount for the appeal is $29,000
plus $2,800 disbursements.
Plaintiffs contend that a multiplier or premium should be
applied to the above figures. Plaintiffs suggest that an appro-
priate multiplier is 2. Plaintiffs cite two cases. Lindy Bros.
Builders, Inc. v. American Radiator & Standard Sanitary
Corp., 540 F.2d 102 (3d Cir.1976); City of Detroit v. Grinnell
Corp., 495 F.2d 448 (2d Cir.1974). However, these were anti-
trust class actions, and did not involve an award of attorneys’
fees based on bad faith. Plaintiffs have cited no cases involving
the latter type of award where a multiplier was used.
Judging from the citations provided by the parties here, the
question of whether to apply a multiplier in a bad faith fee
award has not been specifically discussed in the cases. How-
ever, there is some suggestion that such an award should be
limited to the reasonable expenses arising from the bad faith
conduct. See Browning Debenture Holders’ Committee v.
DASA Corp., 560 F.2d 1078, 1089 (2d Cir.1977); Wright v.
Jackson, 522 F.zd 955, 958 (4th Cir.1975); Jn re National
Student Marketing Litigation, 78 F.R.D. 726, 728 n. 3
(D.D.C.1978), aff'd and remanded, 663 F.2d 178 (D.C.
Cir. 1980).
In the present case the court declines to apply a multiplier. It
is sufficient for plaintiffs’ attorneys to be compensated for
their time at regular hourly rates. The effect of defendants’
ASI
bad faith conduct was to increase the amount of plaintiffs’
attorneys’ services required for this litigation. The appropriate
remedy is to compensate for those services.
The court also declines to award attorneys’ fees in connec-
tion with the present fee application and work on the State
defendant’s application for permission to obtain funding for
interim work pending the remands to the federal agencies.
This brings us to the final ruling as to liability for attorneys’
fees and disbursements. Plaintiffs are entitled to a total award,
relating to work on the fisheries issue at the two trials and on
the appeal, in the amount of
Fees
RM i scs ck uhwrtbaet eeu eanteee $ 155,870
RE rere error tT 76,335
EE. aac ncdekaeth caches wen 29,000
$ 261,205
Disbursements
RIE ee eri Vea evan eunkkacaeKs $ 21,245
A ats eles eee cure ohn hs Gi ark 5,004
NE CRA NV KARE RNR MARKS ARES 2,800
$ 29,049
Since the State defendant participated in both trials and ap-
pealed the fisheries rulings, as described above, the State
defendant is liable for the entire fee award of $261,205 and
disbursements of $29,049, or a total of $290,254.
However, each group of federal defendants is liable for a
iesser amount. The Corps defendants participated only in the
first trial and did not appeal the fisheries rulings. Therefore the
Corps defendants are liable for fees in the amount of $155,870
and disbursements of $21,245, or a total of $177,115. The
FHWA defendants participated only in the second trial and did
not appeal the fisheries rulings. Therefore the FHWA defen-
dants are liable for fees in the amount of $76,335 and disburse-
ments of $5,004, or a total of $81,339.
Settle judgment.
APPENDIX C
AS53
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
81 Civ. 3000
aoe
SIERRA CLUB, THE CITY CLUB OF NEW YORK, BUSINESS FOR
MASS TRANSIT, COMMITTEE FOR BETTER TRANSIT INC.,
NYC CLEAN AIR CAMPAIGN, INC., WEST 12TH STREET
BLOCK ASSOCIATION, HUDSON RIVER FISHERMEN’S
ASSOCIATION, HUDSON COUNTY CITIZENS FOR CLEAN
AIR, SEYMOUR DURST, OTIS BURGER, MARY ROWE, and
HOWARD SINGER, Plaintiffs,
——\
UNITED STATES ARMY CORPS OF ENGINEERS, JOHN MARSH,
as Secretary of the Army of the United States, JOSEPH K.
BRATTON, as Chief of Engineers, WALTER M. SMITH, JR.,
as New York District Engineer of the United States Army
Corps of Engineers, WILLIAM C. HENNESSY, as Commis-
sioner of the New York State Department of Transporta-
tion, UNITED STATES DEPARTMENT OF TRANSPORTATION,
ANDREW L. LEWIS, JR., as Secretary of Transporation of
the United States, FEDERAL HIGHWAY ADMINISTRATION,
RAYMOND A. BARNHART, as Administrator of the Federal
Highway Administration, Slefondants,
THE CITY OF NEW YORK,
Defendant-Intervenor.
+
JUDGMENT
GRIESA, J.
The Court has previously issued a Judgment dated April 14,
1982 on claims against the defendant United States Army
AS54
Corps of Engineers (the “Corps”) and its officials, and defen-
dant William Hennessy, as Commissioner of the New York
State Department of Transportation (the “State”), in connec-
tion with the highway and urban renewal project known as
“Westway”, and a second Judgment dated July 23, 1982 on
claims against the defendants United States Department of
Transportation and the Federal Highway Administration
(“FHWA”), as well as certain officers of those agencies. There-
after, plaintiffs, Sierra Club, The City Club of New York, NYC
Clean Air Campaign, Inc. and Hudson River Fishermen’s
Association (“plaintiff-applicants”) applied to the Court for an
award of attorneys’ fees and disbursements against the Corps,
FHWA and the State in connection with the proceedings that
resulted in such Judgments.
The Court has considered the submissions of all the parties
relating to the plaintiff-applicants’ application, and has ren-
dered a decision dated June 27, 1984, making findings of fact
and conclusions of law.
IT IS ORDERED, DECLARED AND ADJUDGED THAT:
Plaintiff-applicants are entitled to recover certain amounts
for attorneys’ fees and disbursements, as set forth in Section II
below, under the common law. Plaintiff-applicants’ claim
against the United States under 28 U.S.C. § 2412(d) is denied.
1. Plaintiff-applicants are awarded attorneys’ fees and dis-
bursements against the respective defendants as follows:
A. As against the State, attorneys’ fees in the amount
of $261,205, plus disbursements in the amount of
$29,049, for a total of $290,254, together with interest as
specified in paragraph 2 below.
B. As against the Corps, attorneys’ fees in the amount
of $155,870, plus disbursements in the amount of
A55
$21,245, for a total of $177,115, together with interest as
specified in paragraph 2 below.
C. As against FHWA, attorneys’ fees in the amount of
$76,335, plus disbursements in the amount of $5,004, for
a total of $81,339, together with interest as specified in
paragraph 2 below.
2. Interest shall accrue and be payable on the amounts
awarded to plaintiff-applicants, to the extent permitted by law,
from the date of entry of this Judgment to the date of
payment.
3. The respective defendants shall be jointly and severally
liable to the plaintiff-applicants for the full amount of the fees
and disbursements awarded herein, subject to the following
limitations:
A. The liability of the State shall be limited to
$290,254, plus interest on such amount as specified in
paragraph 2.
B. The liability of the Corps shall be limited to
$177,115, plus interest on such amount as specified in
paragraph 2.
C. The liability of FHWA shall be limited to $81,339,
plus interest on such amount as specified in paragraph 2.
D. In no event shall plaintiff-applicants’ total recovery
exceed $290,254, plus interest on such amount in accord-
ance with the provisions of paragraph 2.
4. Subject to the limitations set forth in paragraph 3, plain-
tiff-applicants shall be entitled to recover the attorneys’ ‘ees
and disbursements awarded herein against any one or more of
the defendants, without apportionment. Nevertheless, the de-
fendants shall have the right of contribution against each other.
5. Except as set forth herein, plaintiff-applicants’ applica-
tion for the award of attorneys’ fees and disbursements is
denied.
A56
6. This Court retains jurisdiction over this action for all
purposes, including without limitation, for the purpose of
enabling any of the parties to apply to the Court for such
further orders or directions as may be necessary or appropri-
ate, for consideration of any further application for legal fees
or other costs, and for the purpose of securing compliance with
this Judgment.
Dated: New York, New York
July 19, 1984
/s/ THOMAS P. GRIESA
‘Thomas P. Griesa
OC S.i-3.
AKB:110
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.