Petition for Writ of Certiorari — Trident Seafoods Corp. v. United States

~~

u ie UOUl j

\ PILED

‘96 Z25NV 519%

; OF THE CLERK

In The .

Supreme Court of the Anited States

>

October Term, 1996

TRIDENT SEAFOODS CORPORATION,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

Petition for Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI-

JOSEPH T. PLESHA

Counsel of Record

ROBERT D. NELSON

5303 Shilshole Avenue N.W.

Seattle, Washington 98107-4021

(206) 783-3818

MATTHEW P. BERGMAN

LAW OFFICES OF

JAMES D. BURNS, P.S.

2200 Fourth Avenue

Seattle, Washington 98121-2087

(206) 448-2200

Attorneys for Petitioner

9803

jez

or eer (800) 3 APPEAL « (800) 5 APPEAL + (800) BRIEF 21

ervices, inc.

2)

95

DP Aa URI IRS AEN RN A A tea eey*sa eee oR eNO LET NELLIE A ONES LLL RE RT DELON TEM

or DEERE EE Ste

SEITE me

i

QUESTION PRESENTED

This appeal raises the question of when attorney fees are

subject to the cost-shifting provisions of Federal Rule of Civil

Procedure 68.

Rule 68 mandates that when a defendant’s Offer of

Judgment exceeds the amount recovered by the plaintiff at trial,

the plaintiff must pay the “costs” incurred by a defendant after

the offer was served. In Marek v. Chesny, 473 U.S. 1 (1985), this

Court held that the definition of “costs” under Rule 68 was

controlled by the underlying statute on which the particular

litigation was brought. Under Marek, whenever a statute

includes attorney fees as awardable costs, such fees are subject

to cost-shifting under Rule 68.

While Marek held that attorney fees could constitute

“costs” subject to Rule 68, it did not address the nature and

circumstances under which such fees could be awarded. This

Petition asks the Court to set forth the circumstances under

which a defendant may recover its attorney fees under Rule 68

and presents the following question of first impression:

Are the cost-shifting provisions of Rule 68 abrogated by

the terms of an underlying statute which provides separate

criteria for recovery of costs?

ii

PARTIES TO THE PROCEEDING

United States Environmental Protective Agency,

Respondent.

RULE 29.6 LISTING

Pursuant to Rule 29.6 Petitioner Trident Seafoods

Corporation is a private corporation registered in the State of

Washington with no parents or subsidiaries (other than those

that are wholly owned). James Hinton and Tom Stakkland were

co-defendants with Trident Seafoods at trial, but were not

parties to the Ninth Circuit appeal giving rise to this Petition.

|

|

:

|

i

hii

TABLE OF CONTENTS

Page

TOES TEP OEE Pe NT Tee aD i

Pattiostothe Proceeding .........ccccccccccccccee ii

IE ae oa. bin eeceviee¥seepire. ii

NE Mis oak v5 5 os 606 b 0 creeks, iii

eee ce, ot ees iv

Ne aco odd dick oes d bce sudeecdiacdve l

Statement ofJurisdiction ............sccccccscccce l

Statutory Provision and Rule Involved .............. l

PN aioe ouvk sb d's céceceeeecacaes 3

TE a a 3

B. District Court PD CSN s he ve eueinss a

©. Appeal Ninth Circule .........ccccccccces 6

Reasons for Granting the Writ ..................... 7

I. The Ninth Circuit’s decision frustrates the

purpose of Rule 68 and undermines this Court’s

holding in Marek v. Chesny. ............0005. 7

iv

Contents

Page

II. Trident’s attorney fees are “properly awardable”

WU BEE, os vk nce cesbeavsasedecsivauses 9

COUNION 5 00s evceudsus han bencsne ce pease ees vol 11

TABLE OF CITATIONS

Cases Cited:

Crossman v. Marcoccio, 806 F.2d 329 (ist Cir. 1986),

cert. denied, 481 U.S. 1029(1987) ............... 9,10

Delta Air Lines, Inc. v. August, 450 U.S.346(1981) ... 8

Gay v. Waiters’ and Dairy Lunchmen’s Union Local 30,

S6FP.R.D. SOO(N.D. Cal. 1966) 2.0 cccccvcsscccess 8

Gustafson v. Alloyd Co.,___ U.S. __, 115 S. Ct. 1061

CRPOG). dwanadecickussndcddpaved ashes 8

Hopper v. Euclid Manor Nursing Home, 867 F.2d 291

CR FE an cen eA FS 8 ee ae eueeheess 10

Marek v. Chesny, 473 U.S. 1(1985) ........... i, 6,7,8,9, 10

O’Brien v. City of Greers Ferry, 878 F.2d 1115 (8th Cir.

SORE) s vnccno aes cone canes y Vedas heceeedeaese 10

Sheppard v. Riverview Nursing Center, Inc., 88 F.3d 1332

COURGEE: TOES ook Kae wunccbedes sakeesivesoeues 10

Sibbach v. Wilson & Co.,312U.S.1(1941) .......... 8

Contents

Page

Statutes Cited:

a da a ae) II er ATE Gilacy ker eee ]

ent cate Lead. RO PO IRS Te Le ic 5,6

UB EIOUED ooo ciicecriseeds ele 10

Oe te E SUE hres 665 kb0ekdds SelEAL UR 9

Tene PROUD 05 5 ib shins s Cs ak te 10

Te Pe TIO. « sn conn neo ioikekn ns. 1,2, 5,6, 7,9, 10

5S BAS PAIN oon vcvecccesccc 10

Ta mee PROMO) © 50k boii ve Re os heen 10

Tes BN os gn ob 6b cae chee 10

pinches cc hg ig POPE LOT ET OBR I EOE tier! 10

Termes EIN 6 Gio bi bx v ovadlbo vhs ccs 10

Rule Cited:

Federal Rule of Civil Procedure68 ....... i, 1,5,6,7,8,9, 10

Other Authority Cited:

TO GR aMic Shy FOOLITOD 6 oso k vid ohn d¥ecncden lk. 3

vi

Contents

APPENDIX

Appendix A — Opinion of the United States Court of

Appeals for the Ninth Circuit Filed August 7, 1996 ..

Appendix B — Order of the United States District Court

for the Western District of Washington at Seattle Filed

PE UPPER ohn cnicnesencdddesnkenitntanece

Appendix C — Offer of Judgment of the United States

District Court for the Western District of Washington

at Seattle Dated May 2, 1993 .....cccccccescsccee

Appendix D — Offer of Judgment of the United States

District Court for the Western District of Washington

at Seattle Dated July 2, 1993 .......ccceccccccces

Page

la

2la

29a

1

Petitioner, Trident Seafoods Corporation (“Trident”),

respectfully petitions for a Writ of Certiorari to review the

judgment of the United States Court of Appeals for the Ninth

Circuit.

OPINION BELOW

The findings of fact and conclusions of law of the Unites

States District Court for the Western District of Washington are

unreported and are reprinted in Appendix B. The United States

Court of Appeals for the Ninth Circuit issued a published

opinion in this matter on August 7, 1996 reprinted in Appendix

A.

STATEMENT OF JURISDICTION

The Ninth Circuit judgment and opinion were rendered on

August 7, 1996. This Court’s jurisdiction is invoked under 28

U.S.C. § 1254(1).

STATUTORY PROVISION AND RULE INVOLVED

This Petition asks the Court to determine the relationship

between Federal Rule of Civil Procedure 68 and Section 1 om

of the Clean Air Act.

Rule 68 provides as follows:

At any time more than 10 days before the

trial begins, a party defending against a

claim may serve upon the adverse party an

offer to allow judgment to be taken against

the defending party for the money or

property or the effect specified in the offer,

with costs then accrued. If within 10 days

2

after the service of the offer the adverse

party serves written notice that the offer is

accepted, either party may then file the offer

and notice of acceptance together with proof

of service thereof and thereupon the clerk

shall enter judgment. An offer not accepted

shall be deemed withdrawn and evidence

thereof is not admissible except in a |

proceeding to determine costs. If the ;

judgment finally obtained by the offeree is

not more favorable than the offer, the offeree

must pay the costs incurred after the making

of the offer. When the liability of one party ?

to another has been determined by verdict or

order or judgment, but the amount or extent

of the liability remains to be determined by

further proceeding, the party adjudged

liable may make an offer of judgment, which

shall have the same effect as reasonable time

not less than 10 days prior to the

commencement of hearings to determine the

amount or extent of liability.

Section 113(b) provides in pertinent part as follows:

In the case of any action brought by the

administrator under this subsection, the

court may award costs of litigation

(including reasonable attorney and expert

witness fees) to the party or parties against

whom such action was brought if the court

finds that such action was unreasonable.

42 U.S.C. § 7413(b).

3

STATEMENT OF THE CASE

A. Factual Summary

In 1988, Trident purchased an abandoned fish cannery ina

small town approximately 90 miles north of Seattle and hired a

local general contractor who employed a subcontractor to

remove asbestos from the facility. The asbestos abatement

attracted the attention of the Washington State air pollution

authority which cited Trident’ and the general contractor for

failing to provide written notice of the asbestos removal.

Trident paid a $250 fine for this offense.

The Environmental Protection Agency (“EPA”) learned

that state officers had inspected Trident’s facility in September

1988, but did not notify Trident of its interest until one year

later. Trident responded to EPA’s inquiries in 1989, and heard

nothing until 1992 when it was informed that the 1988 incident

had been referred to the Department of Justice for enforcement

of federal asbestos regulations promulgated under the Clean

Air Act.?

Trident met with attorneys representing Respondent before

the case was filed in an attempt to settle the dispute.

Respondent's attorneys demanded $346,000 in civil penalties, a

figure ten times greater than the average settlement that the

Government reached in similar cases around the country.

Trident objected to the Respondent’s valuation of its case, but

was told that $346,000 was a reasonable settlement since it

would cost Trident more to litigate the case through trial.

1. Both state and federal asbestos regulations impose strict liability on

any property owner that contracts for asbestos removal on its property.

2. These work practice standards govern any “renovation” or

“demolition” activity involving asbestos, and are codified at 40 C.F.R. 61,

146 (1988).

4

In subsequent settlement discussions, Trident’s president

was informed that the reason the Government was focusing on

Trident was because the company had “deep pockets.”

Respondent’s motivation was even more candidly expressed in

a Statement by a Department of Justice attorney to one of the co-

defendants that “Trident made $30 million in sales last year and

I want a piece of it!”

B. District Court Proceedings

Following the breakdown of settlement negotiations, the

United States’ brought suit against Trident and the two

contractors who performed the asbestos abatement.

Respondent alleged four substantive violations of the federal

asbestos regulations and one notice violation identical to the

offense that had previously been charged by the State of

Washington. The district court granted summary judgment to

the United States on the notice violation, but found factual

questions on the four substantive charges.

At the close of discovery, Trident served Respondent with

an Offer of Judgment consisting of a$30,000 cash payment and

acomprehensive asbestos compliance and abatement program.*

This offer was rejected by Respondent. Later, the parties

engaged into mediation with a neutral mediator proposed by

Respondent’s counsel. The mediator analyzed the case and

issued a letter to all parties recommending that Trident increase

its Offer of Judgment to $50,000. Trident served the United

States with a second Offer of Judgment identical to the

3. Trident’s initial Offer of Judgment committed the company to (1)

pay a $30,000 civil penalty; (2) institute a $141,000 compliance program;

and (3) spend $100,000 on asbestos abatement over the next 18 months. See

Appendix C.

5

settlement package recommended by the mediator.‘

Respondent rejected the offer and pushed the case to trial.

Following a jury trial, a defense verdict was rendered on all

four remaining counts. Trident was assessed a $64,000 civil

penalty for the notice violation and appealed this judgment to

the Ninth Circuit. The Ninth Circuit reversed the penalty and,

on remand, the district court reduced its judgment to $25,000.

Thus, the judgment ultimately rendered in this case was

substantially less than the cash component of the two Offers of

Judgment that Trident served on Respondent before trial.

Trident filed motions at the district court level to recover its

costs, including attorney fees, under Rule 68, Section 113(b) of

the Clean Air Act and 28 U.S.C. § 2412. The district court held

Trident could not recover its attorney fees under Rule 68,

reasoning as follows:

This Court concludes that Rule 68 (Offer of

Judgment) does not apply to the United

States as a plaintiff in an action brought

under the Clean Air Act. The basis for

awarding attorney’s fees has been laid out by

Congress in the Clean Air Act, and will not

be expanded here.

The district court faulted Respondent for pushing the case

to trial with excessive settlement demands, but concluded that

the Government’s conduct was not so unreasonable to warrant

an award of attorney fees under Section 113(b). Nevertheless,

the district court held that Trident was entitled to recover its

statutory costs under 28 U.S.C. § 2412 and taxed costs against

the United States in the amount of $21,000.

4. Trident’s second Offer of Judgment was identical to the previous

offer, except that it increased the civil penalty to $50,000. See Appendix D.

C. Appeal to Ninth Circuit

Trident appealed the denial of its motion for attorney fees

to the United States Court of Appeals for the Ninth Circuit.*

The United States cross-appealed, assigning error to the district

court’s taxation of costs.

The Ninth Circuit affirmed the district court, holding that

Trident could not recover its attorney fees under Rule 68. In

reaching this conclusion, the Ninth Circuit held that Marek only

mandates fee-shifting where the defendant satisfies the

substantive criteria for attorney fee awards set forth in the

underlying statute. The Ninth Circuit held that since Section

113(b) of the Clean Air Act provides for an award of costs,

including attorney fees, in cases where the government’s

conduct was “unreasonable,” Trident could not recover its

costs, including attorney fees, under Rule 68 absent a finding of

unreasonableness. Because the Ninth Circuit concluded that the

district court had acted within its discretion in concluding that

Respondent was not unreasonable, Trident could not recover its

costs, including attorney fees, under Rule 68.

Although the Ninth Circuit held that the Clean Air Act was

the only vehicle under which Trident could recover its attorney

fees, the court nevertheless affirmed the district court’s award

of statutory costs. In contrast to the reasoning used to deny

Trident’s request for attorney fees under Rule 68, the Ninth

Circuit found that Section 113(b) does not specifically prohibit

cost awards under 28 U.S.C. § 2412.

5. Trident sought review of both the district court’s denial of attorney

fees under Rule 68 and Section 113(b) of the CleanAirAct. This Petition is

only addressed toTrident’s right to attorney fees under Rule 68.

7

REASONS FOR GRANTING THE WRIT

This Petition presents an important question of federal law

which has not been, but should be, settled by this Court: Are the

cost-shifting provisions of Rule 68 abrogated by an underlying

statute that provides separate criteria for the recovery of costs?

I.

THE NINTH CIRCUIT’S DECISION FRUSTRATES

THE PURPOSE OF RULE 68 AND UNDERMINES

THIS COURT’S HOLDING IN MAREE V. CHESNY.

The Ninth Circuit’s holding renders Rule 68 completely

inoperative since there could never be a situation where a

defendant would be able to recover costs, including attorney

fees, under Rule 68 where the defendant was not already

entitled to costs and fees under Section 1 13(b) of the Clean Air

Act. If this Court allows the Ninth Circuit’s ruling to stand,

Clean Air Act defendants will have no incentive to make Offers

of Judgment and plaintiffs will have no incentive to accept such

offers.

Federal Rule of Civil Procedure 68 provides:

At any time more than 10 days before the

trial begins, a party defending against a

claim may serve upon the adverse party an

offer to allow judgment to be taken against

the defending party for the money or

property or to the effect specified in the

offer, with costs then accrued.... If the

judgment finally obtained by the offeree is

not more favorable than the offer, the offeree

must pay the costs incurred after the making

of the offer.

The Federal Rules of Civil Procedure have “the force of a

federal statute.” Sibbach v. Wilson & Co.,312 U.S. 1, 13 (1941).

When construing the interrelationship between two statutory

provisions, courts must give the statutes a sensible reading that

avoids redundancy or surplusage. Gustafson v. Alloyd Co., __

U.S. __, 115 S. Ct. 1061, 1065 (1995). The Ninth Circuit’s

analysis, however, completely undermines this Court’s holding

in Marek and robs Rule 68 of any independent operative force.

“The plain purpose of Rule 68 is to encourage settlement

and avoid litigation.” Marek, 473 U.S. at 4. See also Delta Air

Lines, Inc. v. August, 450 U.S. 346, 352 (1981). Rule 68

“prompts both parties to a suit to evaluate the risks and costs of

litigation, and to balance them against the likelihood of success

upon trial on the merits.” Marek, 473 U.S. at 4. “Application of

Rule 68 will serve as a disincentive for the plaintiff’s attorney to

continue litigation after the defendant makes a settlement

offer” and forces plaintiffs and their attorneys to “think very

hard about whether continued litigation is worthwhile.” Jd. at

10-11.A plaintiff who rejects an offer of judgment “assume(s]

the risk that the outcome of the case will be less favorable than

the offer, on pain of having to pay the costs subsequently

incurred by the offeror.” Gay v. Waiters’ and Dairy Lunchmen’s

Union Local 30, 86 F.R.D. 500, 502 (N.D. Cal. 1980).

This case represents the type of litigation practices Rule 68

was designed to prevent. From the outset of this litigation,

Justice Department attorneys inflated the value on their case

against Trident. In an effort to extract a“piece” out of Trident’s

“deep pockets,” Respondent demanded that Trident reach a

settlement ten times above the national average for similar

cases. Respondent justified their settlement demands to

Trident based upon the costsTrident would incur to litigate the

case through trial. Trident responded by serving Offers of

Judgments on the United States to encourage a serious

i aia

9

evaluation of the risk and costs of litigation and to balance them

against the likelihood of success at trial. Respondent rejected

each of these offers and ignored the advice of its proposed

mediator, thereby pushing the case to acostly and unnecessary

trial. Application of Rule 68 to this case will encourage

reasonable settlements and deter unnecessary litigation by

holding the Respondent to the consequence of its actions.

Il.

TRIDENT’S ATTORNEY FEES ARE “PROPERLY

AWARDABLE” UNDER MAREK.

Although Rule 68 explicitly shifts costs to the plaintiff, the

rule does not specify which litigation expenses are cognizable

as “costs.” In Marek, this Court considered for the first time

whether attorney fees were subject to cost-shifting in a civil

rights action brought under 42 U.S.C. § 1983. After evaluating

the purpose of Rule 68, this Court held that the term “costs”

encompasses “all costs properly awardable under the relevant

substantive statute .. .” Marek, 473 U.S. at 9-10. Where the

underlying statute includes attorney fees as recoverable costs,

such fees are subject to the cost-shifting provisions of Rule 68.

In holding that Trident could not recover attorney fees

under Rule 68, the Ninth Circuit concluded that, in Clean Air

Act cases, attorney fees are only “properly awardable” where

the defendant satisfied the substantive requirements of Section

113(b). Because Respondent had not been sufficiently

“unreasonable” to warrant an award of attorney fees under

Section 113(b), the Ninth Circuit concluded that Trident could

not recover its attorney fees under Rule 68.°

6. The Ninth Circuit's analysis was in accord with the First Circuit's

holding in Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986), cert. denied,

(Cont'd)

10

Throughout the Clean Air Act, costs are defined in the

following manner: “costs of litigation (including reasonable

attorney and expert witness fees).” 42 U.S.C. §§ 300j-8(d),

7413(b), 7413(d)(5)(B), 7524(c)(6), 7604(d), 7607(f),

7622(b)(2)(B). Because Congress expressly included

attorney’s fees as“costs of litigation” awardable in a CleanAir

Act suit, “such fees are subject to the cost-shifting provision of

Rule 68.” Marek, 473 U.S. at 9. The Ninth Circuit therefore

erred in affirming the district court’s denial of Trident’s motion

for attorney fees.

(Cont'd)

481 U.S. 1029 (1987), a civil rights case in which the Court held that attorney

fees were not subject to Rule 68 unless the substantive requirements of the

underlying statute were satisfied. The Court reasoned that since a plaintiff's

action must be “frivolous, unreasonable or without foundation” to warrant

attorney fees under 42 U.S.C. § 1988, such fees could not be awarded under

Rule 68 unless that same standard was satisfied. Jd. at 333. Similar holdings

have also been reached by the Fourth Circuit in Sheppard v. Riverview

Nursing Center, Inc., 88 F.3d 1332 (4th Cir. 1996), the Sixth Circuit in

Hopper v. Euclid Manor Nursing Home, 867 F.2d 291, 296 (6th Cir. 1989),

and by the Eighth Circuit in O’Brien v. City of Greers Ferry, 878 F.2d 1115,

1120 (8th Cir. 1989).

11

CONCLUSION

For these reasons a writ of certiorari should issue to review

the judgment and Opinion of the Ninth Circuit.

Respectfully submitted,

JOSEPHT. PLESHA

Counsel of Record

ROBERT D. NELSON

5303 Shilshole Avenue N.W.

Seattle, Washington 98107

(206) 783-3818

MATTHEW P. BERGMAN

LAW OFFICES OF

JAMES D. BURNS, PS.

2200 Fourth Avenue

Seattle, Washington 98121-2087

(206) 448-2200

Attorneys for Petitioner

la

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

FILED AUGUST 7, 1996

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Nos. 94-35989

95-35074

D.C. No. CV 92-1025-CRD

UNITED STATES OF AMERICA,

Plaintiff-Appellee-Cross-Appellant,

v.

TRIDENT SEAFOODS CORPORATION,

Defendant-Appellant-Cross-Appellee.

Appeals from the United States District Court for the Western

District of Washington

Carolyn R. Dimmick, District Judge, Presiding

Argued and Submitted

April 10, 1996 — Seattle, Washington

Filed August 7, 1996

Before: Eugene A. Wright, Harry Pregerson and A. Wallace

Tashima, Circuit Judges.

Opinion by Judge Tashima

2a

Appendix A

OPINION

COUNSEL

Lois J. Schiffer, Assistant Attorney General, Lisa E. Jones,

United States Department of Justice, Washington, D.C., for the

plaintiff-appellee-cross-appellant.

Ralph H. Palumbo, Heller, Ehrman, White & McAuliffe,

Seattle, Washington, for the defendant-appellant-cross-

appellee.

Daniel T. Fitzpatrick, Pacific Legal Foundation, Sacramento,

California, for the amicus curiae.

TASHIMA, Circuit Judge:

The United States brought an action against Trident

Seafoods Corporation (Trident) for violating the Clean Air Act.

Trident made an offer of judgment before trial, which the

United States rejected. Because the offer of judgment exceeded

the final judgment, Trident moved for an award of attorneys’

fees and costs pursuant to Fed. R. Civ. P. 68. The district court

denied Trident an award of fees, but granted an award of costs.

Trident appeals the order denying fees, and the United States

cross-appeals the order awarding costs. We affirm.

BACKGROUND

Trident is a seafood processing corporation. In May 1988,

the company purchased and began to renovate an abandoned

fish cannery in Anacortes, Washington. To remove asbestos

insulation from the facility, Trident hired James Hinton, a

3a

Appendix A

general contractor. He in turn hired a subcontractor, Thomas

Stakkeland, who removed over five tons of asbestos during five

days in August and September 1988. Stakkeland, who was not

certified at the time to remove asbestos, used his eleven-year-

old son and a person with no prior experience in asbestos

removal to assist in the clean-up. After the clean-up was

supposedly completed, at least five bags of asbestos were left at

the facility.

On September 26, 1988, an asbestos inspector for a state

agency, the Northwest Air Pollution Control Authority

(NWAPCA), learned of the asbedstos removal and inspected

the facility. During the inspection, he removed samples of

suspected asbestos for analysis. The results showed that all

samples contained more than one percent asbestos.

On September 30, 1988, Trident notified the government

of its intent to remove the asbestos. On October 5, 1988, the five

bags of asbestos left by Stakkeland were removed from the

Anacortes facility. The inspector also returned and removed

additional samples from the facility, which again tested positive

for asbestos.

Trident eventually hired a new asbestos contractor to

remove the remaining asbestos at the Anacortes facility.

Twenty-five bags were removed on October 14, 1988.

NWAPCA cited Trident for failing to provide advance written

notice of the planned asbestos abatement. As a result, Trident

paid a $250 fine to the State of Washington.

The Environmental Protection Agency (EPA) also learned

of the asbestos abatement of the Ancortes facility. The Clean

Air Act authorizes the EPA to develop National Emission

4a

Appendix A

Standards for Hazardous Air Pollutants (NESHAP). 42 U.S.C.

§§ 7412(c) and 7414(a) (1988).' The asbestos NESHAP

provides notice requirements and work practice standards that

must be met when renovating or demolishing a facility that

contains asbestos. 40 C.F.R. pt. 61, subpt. m (1988). A violation

of NESHAP constitutes a violation of the Act. 42 U.S.C.

§§ 7412(c) and (e) (1988).

In August 1989, the EPA served Trident with a request for

information regarding the abatement of asbestos at the

Anacortes facility. Trident responded that same month. Nearly

three years later, on April 8, 1992, the United States Department

of Justice (DOJ) notified Trident that the EPA had referred the

asbestos abatement matter to the DOJ, which intended to file an

action against Trident for violations of § 7413(b) of the Clean

Air Act, 42 U.S.C. § 7413(b). The DOJ explained that its

purpose in notifying Trident was to give the company an

opportunity to settle the matter before it filed a complaint.

According to Trident, settlement negotiations took place in

April 1992, during which the DOJ stated that it was pursuing the

action because “Trident has deep pockets” and because the

United States wanted “a piece” of $30 million Trident earned in

sales the previous year. The government contended that Trident

would likely incur more than $346,000 in litigation expenses

and risk a liability judgment of more than $3 million, if the

company proceeded to trial. The government, therefore,

offered to settle the action for $346,886. Trident rejected the

offer. Its research indicated that the average settlement in 1992

for alleged violations of NESHAP was between $20,000 and

$35,000.

1. Because this action arose in 1988, the 1988 versions of the Clean

Air Act and related regulations govern these proceedings.

Sa

Appendix A

On June 29, 1992, the DOJ filed an action on behaif of the

United States against Trident. The complaint alleged one notice

violation and four work practice violations of the asbestos

NESHAP as aresult of the asbestos abatement at the Anacortes

facility. Stakkeland and Hinton were named as individual

defendants.

During discovery, the government noticed depositions of

Trident’s President and Vice President to take place during the

Christmas holidays. These depositions were rescheduled,

however, when the trial date was continued. The government

also caused Trident employees and officers to be served at their

homes by United States Marshals, even though Trident’s in-

house counsel agreed to accept trial subopenas on behalf of all

company employees.

On May 3, 1993, Trident served the government with an

offer of judgment pursuant to Fed. R. Civ. P. 68. The offer

included acivil penalty of $30,000, as well as aconsent decree

to; (1) conduct a survey of all Trident vessels and shore

facilities; (2) institute a company-wide asbestos control

program; and (3) expend at least $100,000 on asbestos

abatement within two years. The government rejected the offer

on May 19, 1993.

On July 3, 1993, Trident served the government with a

superseding Rule 68 offer of judgment, which was identical to

the previous offer, except that it increased the civil penalty to

$50,000. The government again rejected the offer.

On July 22, 1993, the district court granted summary

judgment in the government's favor on the claim that Trident

violated the NESHAP notice requirement by failing to provide

6a

Appendix A

advance written notice to the EPA of its intent to remove

asbestos.

Shortly before trial, the government made a settlement

demand in the amount of $125,000, which Trident rejected. The

trial, which began in August 1993, resulted in a jury verdict in

favor of Trident on all four charges of work practice violations.

The district court assessed a penalty for the NESHAP notice

violation in the amount of $65,000, finding that the violation

was continuous with mitigating factors.”

Trident moved for an award of attorney’s fees and costs

pursuant to (1) Rule 68, (2) the Equal Access to Justice Act

(EAJA), and (3) the Clean Air Act. The court denied the motion

for attorney’s fees, but granted the motion for statutory costs

pursuant tothe EAJA.

Trident appealed the $65,000 penalty and we reversed,

finding that the violation was singular rather than continuous.

United States v. Trident Seafoods Corp., 60 F.3d 556, 557 (9th

Cir. 1995). We remanded the action and directed the district

court to impose a new penalty not to exceed $25,000. On

remand, the district court entered judgment imposing a penalty

of $25,000, less $250 already paid.

Trident now appeals the order denying attorneys’ fees. Ina

consolidated appeal, the government seeks review of the order

awarding costs. We have jurisdiction over these timely appeals

under 28 U.S.C. § 1291, and we affirm.

2. Smaller penalties were also assessed against Hinton ($2,500) and

Stakkeland ($5,000).

7a

Appendix A

DISCUSSION

I. ATTORNEYS’ FEES

Trident contends that is entitled to attorneys’ fees as part of

the costs awardable under Rule 68. We review the issue de

novo. Erdman v. Cochise County, 926 F.2d 877, 879 (9th Cir.

1991) (citing Simon v. Intercontinental Transp. (ICT) B.V., 882

F.2d 1435, 1439 (9th Cir. 1989)). Under Rule 68, if a plaintiff

rejects a defendant’s offer of judgment, and the judgment

finally obtained by plaintiff is not more favorable than the offer,

the plaintiff must pay the costs incurred subsequent to the

offer.? Liberty Mut. Ins. Co. v. EEOC, 691 F.2d 438, 442 (9th

3. Rule 68 provides, in relevant part:

At any time more than 10 days before the trial begins,

a party defending against a claim may serve upon the

adverse party an offer to allow judgment to be taken

against the defending party for the money or property

or to the effect specified in the offer, with costs then

accrued. If within 10 days after the service of the offer

the adverse party serves written notice that the offer is

accepted, either party may then file the offer and

notice of acceptance together with proof of service

thereof and thereupon the clerk shall enter judgment.

An offer not accepted shall be deemed withdrawn and

evidence thereof is not admissible except in a

proceeding to determine costs. If the judgment finally

obtained by the offeree is not more favorable than the

offer, the offeree must pay the costs incurred after the

making of the offer.

Fed. R. Civ. P. 68.

8a

Appendix A

Cir. 1982). The award is mandatory; Rule 68 leaves noroom for

the court’s discretion. Id.

The minimum value of Trident’s offer of judgment is

indisputably $50,000. On December 18, 1995, the district court

entered a final judgment imposing a penalty of 25,000 against

Trident. Thus, the offer of judgment exceeds the final judgment.

The term “costs” in Rule 68 is intended to refer to all costs

properly awardable under the relevant substantive statute.

Marek v. Chesny, 473 U.S. 1,9 (1985). Absent congressional

expressions to the contrary, where the underlying statute

defines “costs” to include attorney’s fees, such fees are to be

included as costs for purposes of Rule 68. Id. To determine the

interplay between Rule 68 and the Clean Air Act, the Court

must construe the “plain meaning” interpretation of both the

Rule and the statute in a manner that gives meaning to every

word in each. Id. at 3017.

The Clean Air Act indicates that Congress did not intend to

award attorneys’ fees unless the action was unreasonable. The

Act provides:

In the case of any action brought by the

Administrator under this subsection, the

court may award costs of litigation

(including reasonable attorney and expert

witness fees) to the party or parties against

whom such action was brought if the court

finds that such action was unreasonable.

42 U.S.C. § 7413(b). The only interpretation that gives meaning

to every word in both Rule 68 and the Clean Air Act is the

9a

Appendix A

“costs” in Rule 68 include attorneys’ fees only if the action was

unreasonable.

Trident contends that this interpretation frustrates the

purpose of Rule 68 by robbing it of any independent operative

force. According to Trident, if attorneys’ fees are awardable

under Rule 68 only if the action was unreasonable, there could

never be a case where attorney’s fees would be awarded under

Rule 68 when such fees were not already awardable under the

Clean Air Act. Rule 68 is not intended to expand the bases for

recovery of attorneys’ fees. Rather, the purpose of Rule 68 is to

encourage settlement by forcing the parties “to ‘think very

hard’ about whether continued litigation is worthwhile... .”

Marek, 473 U.S. at 5, 11. An interpretation of Rule 68 “costs”

that includes attorneys’ fees if the government brings an

unreasonable § 7413(b) action is likely to force the government

to scrutinize more closely the reasonableness of its action when

faced with an offer of judgment. If the government concludes

that the court is likely to find that the action is unreasonable, the

offer of judgment is more likely to be accepted.

Trident also cites numerous cases for the proposition that

the EAJA allows a party to recover attorneys’ fees under Rule

68 in a § 7413(b) action. See Thomas v. Peterson, 841 F.2d 332,

334 (9th Cir. 1988); Natural Resources Defense Council, Inc. v.

United States EPA, 703 F.2d 700 (3rd Cir. 1983);

Environmental Defense Fund, Inc. v. EPA, 716 F.2d 915, 918

(D.C. Cir. 1983); Gavette v. Office of Personnel Management,

808 F.2d 1456, 1464-65 (Fed. Cir. 1986). Each of these cases is

distinguishable, however, on the ground that it concerned

§ 2412(d)(1)(A) of the EAJA —a provision not relevant here

for the purpose of determining whether attorneys’ fees should

be awarded. The EAJA does not define “costs” to include

10a

Appendix A

attorneys’ fees. See 28 U.S.C. § 2412(a)(1). Fees instead are

defined separately. 28 U.S.C. §§ 2412(d)(1)(A) & (C)(2)(A).

Thus, because attorneys’ fees are not properly awardable as

“costs” under § 2412(d)(1)(A), they are not within the scope of

Rule 68. See Marek, 473 U.S. at 9 (Rule 68 “costs” include

attorneys’ fees only where “underlying statute defines ‘costs’

to include attorney’s fees”).

Accordingly, Trident is entitled to attorneys’ fees only if

the action was unreasonable.

A. Standard of Review

The district court found that the action against Trident was

reasonable. The standard of review to be applied to such a

finding under § 7413(b) is an issue of first impression. We

review a similar determination by the district court under the

EAJA for an abuse of discretion. Kali v. Bowen, 854 F.2d 329,

334 (9th Cir. 1988). The EAJA permits a prevailing party to

recover attorneys’ fees “unless the court finds that the position

of the United States was substantially justified.” 28 U.S.C.

§ 2412(d)(1)(A).

We apply an abuse of discretion standard to the court’s

determination under § 2412(d)(1)(A) whether or not the United

States’ position was “substantially justified” in accordance

with the Supreme Court’s decision in Pierce v. Underwood,

487 U.S. 552 (1988). In determining the proper standard to

be applied the Supreme Court noted in Pierce that

§ 2412(d)(1)(A) explicitly requires the district court to make

the determination whether the position was substantially

justified. Id. at 559. The Court reasoned, moreover, that

deference should be accorded to the district court because it is

i i NIC bi ace tases ali

lla

Appendix A

better positioned to decide the issue, given its full knowledge of

the factual setting and insights not conveyed by the record. Id.

Finally, the Court considered the impracticality of formulating

a rule of decision for determining whether the government’s

position was “substantially justified.” The Court concluded

that “the question whether the Government's litigating position

has been ‘substantially justified’ is ... a multifarious and

novel question, little susceptible, for the time being at least, of

useful generalization, and likely to profit from the experience

that an abuse-of-discretion rule will permit to develop.” Id. at

562.

The same considerations as in Pierce persuade us that an

abuse of discretion standard should be applied to a district

court’s determination of whether an action is unreasonable

under § 7413(b). As in Pierce, deference should be accorded to

the district court because § 7413(b) explicitly requires the

district-court to determine the issue. And again, as in Pierce, the

government's reasonableness in bringing the action is at issue.

Thus, the district court is better positioned to determine the

issue, and a formulaic rule is not likely to be helpful.

We find an abuse of discretion if the district court bases its

decision on an erroneous conclusion of law or on an irrational

interpretation of the evidence. Williams v. Bowen, 966 F.2d

1259, 1260-61 (9th Cir. 1991) (quoting Kali v. Bowen, 854 F.2d

329, 331 (9th Cir. 1988)).

B. The Law

We begin our review with an analysis of the applicable law.

Courts also have yet to articulate a test for determining whether

an action is unreasonable under § 7413(b). The district court

12a

Appendix A

applied the Ninth Circuit’s test for determining whether the

government’s position was “substantially justified” under the

EAJA. Applying this test was not erroneous because it requires

a finding that the action had a reasonable basis both in law and

fact. See Wilderness Soc’ y v. Babbitt, 5 F.3d 383, 388 (9th Cir.

1993) (“[w]here the Government can show that its case had a

reasonable basis both in law and fact, no award will be made”)

(quoting League of Women Voters v. FCC, 798 F.2d 1255, 1257

(9th Cir. 1986)). Section 7413(b) provides for an award of

attorneys’ fees “if the court finds that such action was

unreasonable.” 42 U.SC. § 7413(b). Thus, the district court

applied a test properly based on the plain language of the

Statute.

The district court concluded that the action was reasonable

based on “the facts of this case and given the clear dictates of

the law.” In so concluding, the court correctly reasoned that a

strict liability standard applied to NESHAP violations. See

United States v. Sealtite Corp., 739 F. Supp. 464, 468 (E.D. Ark

1990); United States v. Hugo Key and Son, Inc., 731 F. Supp.

1135, 1137 (D.R.I. 1989); United States v. Ben’s Truck and

Equip. Inc., 25 Env’t Rep. Cas. (BNA) 1295, 1298 (E.D. Cal.

1986); see also H.R. Rep. No. 294, 95th Cong., Ist Sess. 70

(1977), reprinted in 1977 U.S.C.C.A.N. 1077, 1148 (“[P]ersons

who own or operate pollution sources in violation of . . . health

regulations must be held strictly accountable. . . . Thus, the

committee believes that the remedial and deterrent purposes of

the civil penalty provision would be better served by not

limiting its application to ‘knowing’ violations.”) Thus, given

the governing law, the district court correctly concluded that the

action had a reasonable legal basis.‘

4. Another potential issue of first impression is whether the

_ government's conduct prior to filing the action should also be considered in

(Cont'd)

13a

Appendix A

C. The Evidence

The district court also based its decision on a rational

interpretation of the evidence. In finding that the action was

reasonable, the court considered the government’s manner of

pursuing the action. For example, the court noted the

government’s ten-month delay in notifying Trident of the

NESHAP violations and its nearly four-year delay in

prosecuting the action. The court also noted the government’s

“excessive” litigation tactics and that its settlement position

exceeded the average settlement in a Clean Air Act case by ten

times. Analysis of the government’s conduct caused the court to

remark that it could “well understand Trident’s frustration with

the Government’s pursuit of this case and its failure to settle.”

Trident’s methods for asbestos abatement were

undoubtedly inadequate. The undisputed facts show that

Trident failed to provide advance written notice to the EPA of

the planned asbestos abatement. It is also undisputed that, after

the abatement was supposedly completed, bags of asbestos still

remained at the Ancortes facility; samples taken from the

facility still tested positive for asbestos; and Trident ultimately

hired new contractors to complete the clean-up. Thus, although

the government may not deserve commendation for the manner

in which the action was maintained, its legal and factual

foundation cannot reasonably be disputed. Therefore, the

(Cont'd)

determining if the action is reasonable. We need not reach that question here,

however, because the district court explicitly considered the government's

pre-filing conduct in finding that the action was reasonable. Thus, there is no

issue whether failure to consider the government’s conduct prior to filing the

action resulted in an erroneous application of the law.

l4a

Appendix A

district court’s finding that the action was reasonable should not

be disturbed. See Arizona v. Thomas, 824 F.2d 745, 749 (9th

Cir. 1987) (courts have been “careful to defer to EPA’s choice of

methods to carry out its ‘difficult and complex job’ so long as

that choice is reasonable and consistent with the Clean Air

Act”) (quoting Connecticut Fund for Env’t, Inc. v. EPA, 672

F.2d 998, 1006 (2nd Cir.), cert. denied, 103 S. Ct. 445 (1982)).

II. COSTS

The district court awarded Trident its statutory costs as the

prevailing party pursuant to § 2412(a)(1) of the EAJA, with

provides in relevant part:

Except as otherwise specifically provided

by statute, a judgment for costs, as

enumerated in section 1920 of this title, but

not including the fees and expenses of

attorneys, may be awarded to the prevailing

party in any civil action brought by or

against the United States or any agency...

of the United States . . . in any court having

jurisdiction of such action.

28 U.S.C. § 2412(a)(1). The United States contends that this

provision of the EAJA is preempted by § 7413(b) of the Clean

Air Act, which permits an award of costs only if the district

court finds that the action was unreasonable. According to the

government, the Clean Air Act provides the sole basis for an

award of costs because the EAJA is displaced where “otherwise

specifically provided by statute.” 28 U.S.C. § 2412(a)(1).

We review questions of statutory construction de novo,

based upon the following guidelines:

15a

Appendix A

First, if the statutory language is clear, we need look no

further than that language itself in determining the meaning of

the statute. Certainly that is true if there is no clearly expressed

congressional intent to the contrary. Second, to the extent that

statutes can be harmonized, they should be, but in case of an

irreconcilable inconsistency between them the later and more

specific statute usually controls the earlier and more general

one. Finally, Congress must be presumed to have known of its

former legislation and to have passed new laws in view of the

provisions of the legislation already enacted. Hellon & Assoc.,

Inc. v. Phoenix Resort Corp., 958 F.2d 295, 297 (9th Cir. 1992)

(citations and quotations omitted).

We begin our analysis with the plain language of Clean Air

Act § 7413(b) and EAJA § 2412(a)(1). Hellon; Pacific Mut.

Life Ins. Co. v. American Guar. Life Ins. Co., 722 F.2d 1498,

1500 (9th Cir. 1984) (“primary rule is to ascertain and give

effect to the plain meaning of the language used”) (citing

Hughes Air Corp. v. Public Util. Comm'n, 644 F.2d 1334, 1337

(9th Cir. 1981)). According to the EAJA’s plain language, costs

are recoverable for the prevailing party in all actions against the

United States, unless “otherwise specifically provided by

statute.” 28 U.S.C. § 2412(a)(1). The Clean Air Act’s plain

language provides that a party defending against the United

States in an action under the Clean Air Act may recover costs if

the government’s action is unreasonable. 42 U.S.C. § 7413(b).

Whether these statutes provide alternative or mutually

exclusive bases for costs awards is not made clear by their plain

words. We are, therefore, unable to end our analysis here.

The next step is to determine whether the statutes may be

read harmoniously. Hellon, 958 F.2d at 297; see also Pacific

Mut., 722 F.2d at 1500 (“The words of a statute must be

16a

Appendix A

construed in context and the statutes must be harmonized, both

internally and with each other to the extent possible.”) These

statutes may be harmonized if they are interpreted to provide

independent bases for the recovery of costs. Thus, a defendant

may recover costs (including attorney and expert witness fees)

under § 7413(b), if the government’s action was unreasonable,

whether or not the defendant prevails. This interpretation is not

new. See Pierce, 487 U.S. at 569 (“Conceivably, the

Government could take a position that is not substantially

justified, yet win; even more likely, it could take a position that

is substantially justified, yet lose.”)

In contrast, a prevailing plaintiff or defendant may recover

costs (but no attorney or expert witness fees) under the EAJA,

whether or not the action was reasonable, unless costs are

specifically precluded by another statute. See SEC v. Kaufman,

835 F. Supp. 157, 159 (S.D.N.Y. 1993) (“Costs are available

under EAJA § 2412(a)(1) only when not specifically precluded

by another statute.”) (denying costs under EAJA in action

brought under Securities Exchange Act of 1934, which

provides that “[n]Jo costs shall be assessed for or against the

Commission in any proceeding under this chapter” (15 U.S.C.

§ 78aa)); see also Tulalip Tribes v. FERC, 749 F.2d 1367 (9th

Cir. 1984) (denying costs under EAJA in action brought under

Federal Power Act, which provides that “no costs shall be

assessed against the commission in any judicial proceeding

under this chapter.” (16 U.S.C. § 825p)), cert. denied, 474 U.S.

900 (1985). The more specific statute barring costs awards

creates an irreconcilable inconsistency and thus trumps the

more general EAJA. See Hellon, 958 F.2d at 297. Section

7413(b) does not specifically preclude costs; it simply provides

that costs may be awarded if the court finds that the action was

unreasonable. Thus, there is no irreconcilable inconsistency.

17a

Appendix A

The government contends that the two statutes are not

intended to be read harmoniously. Specifically, the government

argues that § 2412(d)(1)(A)’s exception clause, “[e]xcept as

otherwise specifically provided by statute,” indicates that

EAJA’s cost-shifting provision is intended only as a “gap-

filler”; therefore, it should not be applied here because the

Clean Air Act’s more restrictive cost-shifting provision already

applies.

However, the purpose of the EAJA is to “reduce the

deterrents and disparity” in contesting government action. H.R.

Rep. No. 96-1418, 96th Cong., 2nd Sess. 6 (1980), reprinted in

1980 U.S.C.C.A.N. 4984. An interpretation of the EAJA that

permits costs awards in actions under the Clean Air Act only if

the government was unreasonable undermines the EAJA’s

purpose. If a private party is not assured of recovering its costs

even when it prevails in an action against the government, its

incentive to adjudicate its rights is likely to be deterred by the

perception that it is more practical to endure an injustice than

contest it.

An analogous provision in the EAJA also belies any

congressional intent to award costs only if the government was

unreasonable, regardless of whether the private litigant

prevails. The EAJA’s provision for shifting attorneys’ fees

(Section 2412(d)(1)(A)) begins with the identical exception

clause “[e]xcept as otherwise specifically provided by statute.”

To determine the purpose of this exception clause, several

Circuits have looked to the provision’s legislative history.° See

5. Section 2412(d)(1)(A) states:

Except as otherwise specifically provided by statute,

acourt shall award to a prevailing party other than the

(Cont'd)

18a

Appendix A

Gavette, 808 F.2d at 1464); Environmental Defense Fund, Inc.,

716 F.2d at 917-19; United States v. 329.73 Acres of Land, 704

F.2d 800, 805-06 (5th Cir. 1983); Natural Resources Defense

Council, 703 F.2d at 704-06. A House Report on the EAJA

states:

[SJection [2412(d)(1)(A)] is not intended to

replace or supercede any existing fee-

shifting statutes such as the Freedom of

Information Act, the Civil Rights Acts, and

the Voting Rights Act in which Congress has

indicated a specific intent to encourage

vigorous enforcement, or to alter the

standards or the case law governing those

Acts. It is intended to apply only to cases

(other than tort cases) where fee awards

against the government are not already

authorized.

H.R. Rep. No. 96-1418, 96th Cong., 2nd Sess. 189 (1980),

reprinted in 1980 U.S.C.C.A.N. at 4997.

Given the purpose of the EAJA, there is no reason not to

(Cont'd)

United States fees and other expenses, in addition to

any costs awarded pursuant to subsection (a),

incurred by that party in any civil action (other than

cases sounding in tort). . . unless the court finds that

the position of the United States was substantially

justified or that special circumstances make an award

unjust.

28 U.S.C. 2412(d)(1)(A).

19a

Appendix A

give the exception clause in the EAJA’s cost-shifting provision

the same meaning as in its free-shifting provision. Neither the

legislative history nor the language of the EAJA justifies an

interpretation of the EAJA that expands the bases for recovery

of attorneys’ fees but restricts the availability of costs awards.

The Clean Air Act and the EAJA may be read harmoniously if

they are interpreted to provide alternative bases for the

recovery of costs. Under this construction, the exception clause

in the EAJA’s cost-shifting provision precludes application of

the statute only if another statute allows costs even if the litigant

does not prevail, or specifically bars costs awards, thus creating

an irreconcilable conflict.

We finally observe that “Congress must be presumed to

have known of its former legislation and to have passed new

laws in view of the provisions of the legislation already

enacted.” Hellon, 958 F.2d at 297. Since Congress waived the

United States’ immunity to liability for costs awards long

before § 7413(b) was enacted in its present form, Congress is

presumed to have been aware that costs were already

recoverable for prevailing parties in actions against the

government when it provided that the government’s

unreasonableness was a basis for recovery in actions under the

Clean Air Act. Id. Yet, the Clean Air Act does not state that costs

are available only if the Government was unreasonable, nor

does it state that costs may not be recovered unless the

Government was unreasonable. Rather, the Clean Air Act

provides that “the court may award costs. . . if the court finds

that such action was unreasonable.” Thus, nothing in the

language indicates an intent to preclude application of the

previously enacted EAJA.

20a

Appendix A

Ill. SOVEREIGN IMMUNITY

The government argues that the Clean Air Act provides a

narrow waiver of sovereign immunity which governs the award

of costs in this action. Waivers of immunity must be strictly

construed in favor of the sovereign. Ruckelshaus v. Sierra Club,

463 U.S. 680, 685-86 (1983); United States Dep’t of Energy v.

Ohio, 503 U.S. 607, 615 (1992); Ardestani v. I.N.S., 502 U.S.

126, 137 (1991). They must not be “enlarged beyond what the

language requires.” Ruckelshaus, 463 U.S. at 686. “Neither,

however, should we assume to narrow the waiver that Congress

intended.” United States v. Idaho, ex rel. Director, Idaho Dep’t

of Water Resources, 113 S. Ct. 1893, 1896 (1993) (quoting

Smith v. United States, 507 U.S. 197, 203 (1993)).

This argument merely reiterates the government’s

argument that the Clean Air Act’s more limited waiver should

trump the general waiver of the EAJA, given the latter’s

exception clause. However, here, as explained above, Congress

has left no doubt that it intended to waive the government’s

iramunity to costs awards. On this basis we have concluded that

Congress intended that the costs provision of the EAJA apply to

§ 7413(b) actions. Therefore, the district court did not err in

taxing costs against the government.

AFFIRMED.

2la

APPENDIX B — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE WESTERN DISTRICT OF

WASHINGTON AT SEATTLE FILED AUGUST 2, 1994

UNITED STATES DISTRICT COURT WESTERN

DISTRICT OFWASHINGTON

AT SEATTLE

No. C92-1025D

UNITED STATES OFAMERICA,

Plaintiff,

Vv.

TRIDENT SEAFOODS CORPORATION JAMES HINTON,

andTOM STAKKELAND,

Defendants.

ORDER DENYING TRIDENT’S MOTION

FORATTORNEY’S FEES

THIS MATTER is before the Court on two motions of

defendant Trident Seafoods Corporation (“Trident”) for costs

and attorneys’ fees pursuant to (1) Fed. R. Civ. P. 68 (offer of

judgment) for costs incurred after May 3, 1993; and (2) to the

Equal Access to Justice Act (EAJA) and the Clean Air Act.

After full consideration of the briefs and declarations filed by

counsel, the Court denies Trident’s motions as unsupported by

law and fact under the circumstances of this case.

This case has already had a rather protracted history before

this Court. In the spring of 1993, the United States moved for

summary judgment on all of its claims against Trident for

22a

Appendix B

violation of the National Emission Standards for Hazardous Air

Pollutants (NESHAP), 40C.F.R. pt. 61, subpt. m, in its removal

of asbestos from its facilities. NESHAP was promulgated

pursuant to the Clean Air Act (42 U.S.C. §§ 7412(c) and

7414(a)). Trident countermoved for summary judgment on all

but one claim. On July 22, 1993, the Court granted summary

judgment in favor of the United States on one of its claims —

failure to follow the written notice requirement — and denied

the remainder as involving factual issues. Trident’s motion was

denied.

The case was tried to a jury in August 1993, with the jury

returning a verdict in favor of defendants. Subsequently, the

Court assessed a NESHAP penalty against Trident for the

failure to follow the NESHAP notice requirement in the amount

of $65,000.

FEDERAL RULE OF CIVIL PROCEDURE 68

Trident argues for application of Fed. R. Civ. P. 68 to its

offer of judgment on May 3, 1993.'

1. Rule 68 reads as follows:

At any time more than 10 days before the trial begins,

a party defending against a claim may serve upon the

adverse party an offer to allow judgment to be taken

against the defending party for the money or property

or to the effects specified in the offer, with costs then

accrued... .If the judgment finally obtained by the

offeree is not more favorable than the offer, the

offeree must pay the costs incurred after the making

of the offer.

23a

Appendix B

On May 3, 1993, Trident made an offer of judgment to the

United States which included a $30,000 civil penalty. In

addition, Trident offered a consent decree to (a) institute a

company-wide asbestos control program; (b) conduct an

asbestos survey of all vessels and shore facilities; and (c)

expend at east $100,000 on asbestos abatement. Trident valued

this offer at $271,181.25. On July 2, 1993, Trident offered

$50,000 in civil penalty and offered a consent decree essentially

the same as the May 3 offer. Trident valued this offer at

$291,181.25. The government accepted neither offer.

Trident, therefore, contends that its offers exceeded the

amount plaintiff ultimately gained, and thus, Trident is entitled

to attorneys’ fees and costs. Trident relies on the provision in

the Equal Access to Justice Act (28 U.S.C. § 2412(b)) stating

that the United States is liable to the same extent as any other

party under common law or statute, to apply Rule 68 to the

United States.

The United States opposes the Rule 68 motion on three

grounds:

1. Waiver of sovereign immunity should be read narrowly

and does not apply where a more specific waiver exists;

2. Rule 68 does not fall under common law or statute as

required in the EAJA; and

3. Trident’s offer of judgment was vague and

unquantifiable.

Because the Clean Air Act at 42 U.S.C. 7413 limits an award of

attorneys’ fees or costs to an action brought by the

24a

Appendix B

Administrator which was “unreasonable”, the government

argues that Rule 68 was not intended to apply to cases in which

the United States was the plaintiff. A waiver of sovereign

immunity is narrowly construed in favor of the United States

and will not expanded beyond the statute’s language. Any

waiver of the National Government’s sovereign immunity must

be explicit. See United States v. Mitchell, 445 U.S. 535, 538-

539 (1980).

Waivers of immunity must be “construed

strictly in favor of the sovereign,” McMahon

v. United States, 342 U.S. 25, 27 (1951), and

not “[enlarged] ... beyond what the

language requires.” Eastern Transportation

Co. v. United States, 272 U.S. 675, 686

(1927).

Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-86 (1983).

On its second point, the United States argues that the

provision in the EAJA that the “United States shall be liable. . .

to the same extent that any other party would be liable under the

common law or under the terms of any statute which

specifically provides for such an award” by its very terms, does

not apply toa Rule.

Trident cites to only one case in which a Rule 68 claim

against the United States was recognized. Washington v. United

States, 8 Cl. Ct. 693 (1985). The issue there was a motion to

extend the ten-day period for consideration of an offer of

settlement. The court declined to do so. There was no

discussion of whether or not Rule 68 applied to the United

States as a plaintiff.

25a

Appendix B

This Court found only one other case discussing Rule 68 in

conjunction with the United States’ rejection of an offer of

judgment. United States v. American Commercial Barge Line

Company, 988 F.2d 860 (8th Cir. 1993). In this admiralty case,

the court discussed Rule 68 with regard to a denial by the trial

court of prejudgment interest for the United States for the

period after the United States rejected an offer of judgment.

The Eight Circuit reversed and remanded, concluding that the

rejection of the offer would not eliminate prejudgment interest,

which is a part of damages in an admiralty action. There was no

discussion of Rule 68’s application to the United States.

Interestingly, the Eighth Circuit did note that Rule 68 only

provided for a reimbursement of costs, with costs limited to

such items as “filing fees or witness fees”. Jd. at 864.

Trident contends that its request for an award of attorneys’

fees in addition to costs is supported by Marek v. Chesny, 473

U.S. 1 (1985). The Merek court held that Rule 68 “costs”

included attorneys’ fees where the underlying civil rights

statute provided for attorneys’ fees for the prevailing party.

Merek, however, was not a case involving the United States, nor

was it a case brought under the Clean Air Act. The Clean Air

Act, under which this case was brought, does not provide for an

award of attorneys’ fees to the prevailing party. Rather, as noted

above, an award of attorneys’ fees requires unreasonable

conduct by the government. This will be discussed further in the

next section.

In its final argument, the government contends that with

the exception of the civil penalties, it was impossible to value

the two Trident offers. Most of the consent decree offers were

merely an agreement to do what Trident was required to do

under the law or had already undertaken to do. The value of this

offer to the United States was marginal.

26a

Appendix B

This Court concludes that Rule 68 (offer of judgment) does

not apply to the United States as the plaintiff in an action

brought under the Clean Air Act. The basis for awarding

attorneys’ fees has been laid out by Congress in the Clean Air

Act, and will not be expanded here.

EQUAL ACCESS TO JUSTICE ACT

AND CLEAN AIR ACT

On an alternative theory, Trident argues that it is entitled to

attorneys’ fees and costs pursuant to EAJA (28 U.S.C.

§ 2412(d)(1)(A)* or the Clean Air Act (42 U.S.C. § 413(b)°

These statutes provide for an award against the United States

where its position was not substantially justified (EAJA)or was

unreasonable (Clean Air Act). Trident insists that the

government was unreasonable in its notification (ten months

delay); its prosecution (nearly four years delay before filing

2. Except as otherwise specifically provided by statute, a court shall

award to a prevailing party other than the United States fees and other

expenses, in addition to any costs awarded pursuant to subsection (a),

incurred by that party in any civil action (other than cases sounding in tort),

including proceedings for judicial review of agency action, brought by or

against the United States in any court having jurisdiction of that action,

unless the court finds that the position of the United States was substantially

justified or that special circumstances make an award unjust.

3. In the case of any action brought by the Administrator under this

subsection, the court may award costs of litigation (including reasonable

attorney and expert witness fees) to the party or parties against whom such

action was brought if the court finds that such action was unreasonable.

42 U.S.C. § 7413(b).

27a

Appendix B

complaint); its litigation tactics (excessive discovery, etc.); and

its settlement position (approximately ten times higher than the

average Clean Air case).

This Court has concluded that the Clean Air Act applies

here, but the standard is essentially the same as for EAJA. See,

e.g., Commissioner, Immigration and Naturalization Service v.

Jean, 496 U.S. 154, 163 (1990) (purpose of EAJA to permit

challenge to “unreasonable governmental actions”). Where

“the Government can show that its case had a reasonable basis

both in law and fact, no award will be made.” Wilderness

Society v. Babbitt, 5 F.3d 383, 388 (9th Cir. 1993), quoting

League of Women Voters v. FCC, 798 F.2d 1255, 1257 (9th Cir.

1986). The Court can well understand Trident’s frustration with

the government’s pursuit of this case and its failure to settle.

The futility of trial is, of course, more readily determined after

trial than before. Trident also has had to pay a high penalty for

what were primarily the faults of others. But the law applies a

strict liability standard to violations of NESHAP, and Trident is

liable for the actions and inactions of the persons it hired to

remove asbestos. Under the facts of this case and given the clear

dictates of the law, the Court cannot conclude that the

government was unreasonable in going to trial.

Trident, as an alternative, requests its statutory costs

pursuant to EAJA (28 U.S.C. § 2412(a)). That section provides

for an award of costs to a prevailing party as set out in 28 U.S.C.

§ 1920. The government opposes on the grounds that the Clean

Air Act is the exclusive remedy here. This Court agrees that

where Congress has specifically addressed the award of

attorneys’ fees for unreasonable governmental action, that

remedy is exclusive. The Clean Air Act, however, is silent on

the issue of statutory fees to the prevailing party. The Court of

28a

Appendix B

Appeals for the District of Columbia has recognized that such

costs are routinely awarded against the government even when

the government’s position has been substantially justified.

Groce v. Burger, 763 F.2d 457, 458 n.4 (D.C. Cir. 1985). This

Court will thus permit the taxing of costs against the

government pursuant to 28 U.S.C. § 1920.

THEREFORE, Trident’s motions for award of attorneys’

fees is DENIED, but Trident will be awarded costs pursuant to

28 U.S.C. § 1920. 7

The Clerk of the Court is directed to send copies of this

Order to all counsel of record.

DATED this 1 day of August, 1994.

s/ Carolyn R. Dimmick

CAROLYN R. DIMMICK

United States District Judge

RO ae a Cath

29a

APPENDIX C — OFFER OF JUDGMENT OF THE

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF WASHINGTON AT

SEATTLE DATED MAY 2, 1993

Honorable Caroiyn R. Dimmick

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

No. C92-1025

UNITED STATES OF AMERICA,

Plaintiff,

v.

TRIDENT SEAFOODS CORPORATION, JAMES HINTON,

TOM STAKKELAND,

Defendants.

OFFER OF JUDGMENT

TO: UNITED STATES OF AMERICA

AND: WILLIAM W. WESTERFIELD, III

Trial Attorney

Environmental Enforcement Section

Environment and Natural Resources Division

United States Department of Justice

1425 New York Avenue, N.W., Suite 10011

Washington, D.C. 20005

30a

Appendix C

Pursuant to Rule 68 of the Federal Rules of Civil

Procedure, Defendant Trident Seafoods hereby offers to allow

the following judgment to be taken against it in the above-

captioned cause:

I. Trident will pay a civil penalty in the amount of Thirty

Thousand Dollars ($30,000);

II. Trident will enter into a Consent Decree with the

United States obliging itself to do the following:

A. Institute a company-wide asbestos control

program identical to the control program set forth

in Section V. of the Consent Decree approved by

this Court in United States v. Farwest Fisheries,

Inc., et al.,No. C60-864D (W.D. Wash.), acopy of

which is attached hereto as Exhibit A.

B. Conduct an asbestos survey of all vessels and

shore facilities and develop a company-wide

asbestos abatement plan. A schedule and budget

for this program is attached hereto as Exhibit B.

C. Expend at least One Hundred Thousand Dollars

($100,000) on asbestos abatement within the two

years following entry of this Consent Decree.

The value of this Offer of Judgment is $271,181.25, inclusive of

Plaintiff’s costs. This Offer is made for the purpose specified in

Rule 68 and is not to be construed either as an admission that

Trident is liable in this action, or that the United States has

suffered any damage.

3la

Appendix C

DATED this 3rd day of May, 1993.

Respectfully submitted,

HELLER, EHRMAN, WHITE & McAULIFFE

Ralph H. Palumbo

Washington State Bar #4751

Matthew P. Bergman

: Bys/ Ralph H. Palumbo

Washington State Bar # 20894

:

j

:

:

32a

APPENDIX D — OFFER OF JUDGMENT OF THE

UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF WASHINGTON AT

SEATTLE DATED JULY 2, 1993

Honorable Carolyn R. Dimmick

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

No. C92-1025

UNITED STATES OF AMERICA,

Plaintiff,

Vv.

TRIDENT SEAFOODS CORPORATION, JAMES HINTON,

TOM STAKKELAND,

Defendants.

OFFER OF JUDGMENT

TO: UNITED STATES OF AMERICA

AND: WILLIAM W. WESTERFIELD, III

Trial Attorney

Environmental Enforcement Section

Environment and Natural Resources Division

United States Department of Justice

1425 New York Avenue, N.W., Suite 10011

Washington, D.C. 20005

33a

Appendix D

Pursuant to Rule 68 of the Federal Rules of Civil

Procedure, Defendant Trident Seafoods hereby offers to allow

the following judgment to be taken against it in the above-

captioned cause:

I. Trident will pay a civil penalty in the amount of Fifty

Thousand Dollars ($50,000);

Il. Trident will enter into a Consent Decree with the

United States obliging itself to do the following:

A. Institute a company-wide asbestos control

program identical to the control program set forth

in Section V. of the Consent Decree approved by

this Court in United States v. Farwest Fisheries,

Inc., et al.,No. C60-864D (W.D. Wash.), a copy of

which is attached hereto as Exhibit A.

B. Conduct an asbestos survey of all vessels and

shore facilities and develop a company-wide

asbestos abatement plan. A schedule and budget

for this program is attached hereto as Exhibit B.

C. Expend at least One Hundred Thousand Dollars

($100,000) on asbestos abatement within the two

years following entry of this Consent Decree.

The value of this Offer of Judgment is $291,181.25, inclusive of

Plaintiff’s costs. This Offer is made for the purpose specified in

Rule 68 and is not to be construed either as an admission that

Trident is liable in this action, or that the United States has

suffered any damage.

34a

Appendix D

DATED this 2nd day of July, 1993.

Respectfully submitted,

HELLER, EHRMAN, WHITE & McAULIFFE

Bys/ RalphH. Palumbo

Ralph H. Palumbo

Washington State Bar #4751

Matthew ?. Bergman

Washington State Bar # 20894

Robert D. Nelson

Washington State Bar # 19473