Southeast Alasks Conservation Council, Inc. v. Watson

No. J81-12 CIV (D. Alaska February 23, 1983)

The court rejects plaintiff's request for attorneys fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, in its action under the Alaska National Interest Lands Conservation Act (ANILCA) to reverse the government's approval of U.S. Borax's (the company's) bulk sampling plan for Misty Fjords National Monument, 12 ELR 20658. The court first rules that plaintiff is not entitled to fees under the common benefit exception established by 28 U.S.C. § 2412(b) because the exception is not applicable to benefited classes of this size. Fees must also be denied under 28 U.S.C. § 2412(d) because the position of the government was substantially justified. The court finds that the government met its burden of proof by showing that its litigation stance was reasonable given the legal dispute over the statutory interpretation of ANILCA. The court next rules that plaintiff is not entitled to fees from the government or the company under FED. R. CIV. P. 37(c) for their refusal to admit under Rule 36. The United States is no longer shielded from the claim by Rule 37(f), because the EAJA repealed that provision. However, both the government and the company had reasonable grounds to believe they might prevail on the admission issues and thus are not required to pay fees under Rule 37(f)(3). Likewise, the company is not liable for fees under the bad faith exemption. The court finds that neither the company's activities nor its litigation conduct were made in bad faith.

Counsel are listed at 13 ELR 20233.

[13 ELR 20443]

von der Heydt, J.:

Memorandum and Order

THIS CAUSE comes before the court on plaintiff's motion for attorney's fees (docket #198). Oral argument is denied in order to expedite the business of the court. See Local Rule 5(C)(1).

I. Attorney's Fees Against the United States

Attorney's fees against the United States are sought based on two provisions of the Equal Access to Justice Act. See 28 U.S.C. § 2412(b) and (d). (Supp. V 1981). Neither of these bases may be used to justify attorney's fees in this case.

A. § 2412(b)

Plaintiff's request for attorney's fees under this provision would have the court apply the common benefit exception to the general rule against attorney's fees awards. The general public is alleged to be the class benefited. Case law is clear that the common benefit exception has no applicability to a class of this size. See Southeast Legal Defense Group v. Adams, 657 F.2d 1118, 1123 (9th Cir. 1980); Stevens v. Municipal Court, 603 F.2d 111, 113 (9th Cir. 1979); Trustees for Alaska v. Watt, A81-264 Civil, Order dated February 8, 1983 (in the process of being published). Attorney's fees based on the common benefit exception must therefore be denied.

B. § 2412(d)

An award of attorney's fees under 28 U.S.C. § 2412(d)(1)(A) should be denied if the court finds that the position of the United States was "substantially justified." It is clear that the burden of proof on this issue rests with the Government. See Trustees for Alaska v. Watt, supra, pp. 4-5. The test for determining whether the Government's action is substantially justified is one of reasonableness.See Broad Avenue Laundry and Tailoring v. United States, 693 F.2d 1387, 1391 (Fed. Cir. 1982).

The court concludes that in the present case the United States met its burden of proof and its position was substantially justified. The Government properly characterizes its litigation stance as reasonable in light of the legitimate dispute between the parties over the statutory construction of § 503(h)(3) of ANILCA. This legal issue was a genuine dispute and cannot be characterized as frivolous. In addition, it is of no consequence that plaintiff was ultimately the prevailing party. See generally Trustees for Alaska v. Watt, supra, pp. 5-6. Based on the foregoing, an award of attorney's fees based on 28 U.S.C. § 2412(d)(1)(A) is denied.

C. Fed. R. Civ. P. 37(c)

Rule 37(c) allows a party to seek reasonable attorney's fees for failure to admit as requested under rule 36. Prior to the effective date of the Equal Access to Justice Act (October 1, 1981), rule 37(f) shielded the United States against awards of attorney's fees under rule 37(c). Passage of the Act repealed part (f). Civil actions described in the Equal Access to Justice Act which were pending on, or commenced after its effective date were expressly made subject to the Act's provisions. See Equal Access to Justice Act, Pub. L. No. 96-481, § 208, 94 Stat. 2330 (1980). Since the present case was pending on the effective date of the Act, rule 37(f) is no longer available to the United States as a shield. Hence, with repeal of rule 37(f) Congress intended that the United States should be liable for fees the same as other parties when it abuses discovery. See H. REP. NO. 96-1418, 96th Cong., 2d Sess. 19, reprinted in [1980] U.S. CODE CONG. & AD. NEWS 4984, 4998.

Plaintiff contends it is entitled to fees from federal defendants based on two requests for admissions that were denied. The court declines to award expenses for either request. FED. R. CIV. P. 37(c) allows the court to award reasonable attorney's fees for expenses incurred in proving the truth of a matter denied.The award is not available, however, if:

(1) the request was held objectionable pursuant to Rule 36(a), or (2) the admission sought was of no substantial importance, or (3) the party failing to admit had reasonable ground to believe that he might prevail on the matter, or (4) there was other good reason for the failure to admit.

Id. (emphasis added). See generally Advisory Committee's Note, 48 F.R.D. 541 (1970); 4A MOORE'S FEDERAL PRACTICE P37.04 (2d ed. 1982); 8 FEDERAL PRACTICE AND PROCEDURE § 2290 (1970).

1. Request No. 2. Federal defendants had a reasonable ground to believe they might prevail on the truth of their denial that the 1981 amendment activities "permit U.S. Borax to engage in activities that are part of its 'bulk sampling phase.'" It is clear [13 ELR 20444] to the court that the meaning and application of the terms "bulk sampling" and "bulk sampling phase" constitute genuine legal disputes in this case. The Forest Service made a reasonable, albeit incorrect, determination that Borax's activities were not part of the bulk sampling phase.

2. Request No. 16. Federal defendants similarly had a reasonable ground to believe they might prevail on the truth of their denial that the "amendments authorize Borax to engage in the same activities approved by the Secretary of Agriculture on December 1, 1978." The court notes that federal defendants responded to this request for admission by a partial admit/partial deny. Plaintiff has made no attempt to distinguish the partial denial. The response was substantially an admission, and the court notes defendants' assertion that plaintiff never disproved the partial denial. Reasonable interpretations of the request include the possibility that the amendment activities subsume the activities approved on December 1, 1978. Federal defendants' qualified response reflects this view. In light of the foregoing, the court finds federal defendants had a reasonable ground to believe they might prevail on the matter for the purpose of FED. R. CIV. P. 37(c)(3).

II. Attorney's Fees Against U.S. Borax

Plaintiff also seeks attorney's fees from Borax based on both rule 37(c) and the "bad faith" exception.

A. Fed. R. Civ. P. 37(c)

Plaintiff alleges it is entitled to attorney's fees under rule 37(c) based on three requests for admissions that were denied by Borax. The court again acknowledges the true test under FED. R. CIV. P. 37(c)(3) is "not whether a party prevailed at trial but whether he acted reasonably in believing that he might prevail." 48 F.R.D. at 541.

1. Request No. 1. Borax acted reasonably in believing it might prevail on its position denying that the amendments permitted them to engage in activities that are part of its bulk sampling phase. As previously stated in this memorandum, interpretations of the terms "bulk sampling" and "bulk sampling phase" were genuinely disputed by the parties. Borax's incorrect interpretation of the bulk sampling issue was reasonable for the purpose of rule 37(c)(3).

2. Request No. 15. This request is the same as federal defendants' Request No. 16. Borax flatly denied the request based on an apparent interpretation that it was being asked if the amendment activities were the same in all ways to the activities previously approved by the Secretary. The court finds that Borax had a reasonable ground to believe it might prevail on the matter for the purpose of rule 37(c)(3).

3. Request No. 16. This request asked whether the "amendments authorize Borax to engage in the same activities described in the 1979 bulk sampling study plan." Plaintiff incorrectly characterizes Borax's response as a denial. Borax's qualified admission admitted similarities that existed, but denied the activities were "the same" regarding scope, magnitude or objective. The response also evidences the genuine dispute concerning the meaning of bulk sampling. Under the circumstances, the court finds that Borax had a reasonable ground for denying this request for admission. See FED. R. CIV. P. 37(c)(3).

B. Bad Faith

As an exception to the general rule against attorney's fees, a successful party may be awarded fees when his opponent has acted in bad faith, vexatiously, wantonly or for oppressive reasons. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59 [5 ELR 20286] (1975). See also Hall v. Cole, 412 U.S. 1, 14-15 [3 ELR 20552] (1973). The Ninth Circuit has characterized this judicially-created exception as a narrow one. See United States v. Standard Oil Co. of California, 603 F.2d 100, 103 (9th Cir. 1979). An award of attorney's fees in such situations is punitive in nature, and the penalty can be imposed only in exceptional cases and for dominating reasons of justice. Id. See also 6 MOORE'S FEDERAL PRACTICE P54-77[2] pp. 1709-11 (2d ed. 1982).

The bad faith exception is inapplicable in the present case. The court does not deem Borax's conduct to fall within the exception. Plaintiff's argument in favor of attorney's fees based on bad faith focuses primarily on Borax's denial that it was conducting bulk sampling activities. As previously stated in this memorandum, the bulk sampling issue was a genuine dispute at the very heart of this litigation. The court finds that neither Borax's activities nor its litigation conduct were taken in bad faith, vexatiously, wantonly, or for oppressive reasons.

Accordingly, IT IS ORDERED:

THAT plaintiff's motion for attorney's fees is denied.

DATED this 23rd day of February, 1983, at Anchorage, Alaska.