In a recent case, Administrator v. Turner and Coonan, the National Transportation Safety Board (“NTSB”) held that an award of attorney fees and costs under the Equal Access to Justice Act (“EAJA”) is not appropriate when the FAA dismisses its case prior to a hearing. As we will see, this ruling is yet another barrier to recovery of attorney fees and costs when then the FAA improperly pursues a case against a certificate holder.
Equal Access to Justice Act
Before we talk about the case, a brief EAJA refresher is in order. The EAJA is found at 5 U.S.C. 504 and is implemented in 49 CFR 826. According to 49 CFR 826.1, “The Equal Access to Justice Act, 5 U.S.C. 504 (the Act), provides for the award of attorney fees and other expenses to eligible individuals and entities who are parties to certain administrative proceedings (adversary adjudications) before the National Transportation Safety Board (Board). An eligible party may receive an award when it prevails over the Federal Aviation Administration (FAA), unless the Government agency’s position in the proceeding was substantially justified or special circumstances make an award unjust.” In order to determine whether EAJA fees are available, the key inquiries for an “applicant” (a certificate holder or target of a civil penalty action who is applying for an award of fees) are: (1) Is the Applicant a “prevailing party”? (2) Was the Applicant involved in an “adversary adjudication”? (3) Was the FAA’s position “substantially justified”? and (4) Were the fees actually “incurred” by the Applicant?
The case at hand arose from an FAA order alleging that the two airmen operated an aircraft in an unairworthy condition and, in so doing, violated FARs 91.7(a) (aircraft must in an airworthy condition to be operated), 91.207(a)(2) (aircraft must have approved ELT to be operated), 91.213(a) (requirements that must be met to operate an aircraft with inoperative equipment), and 91.13(a) (careless and reckless). The airmen appealed the FAA’s order to the NTSB but, prior to the scheduled hearing on the merits of the case, the FAA withdrew its case and dismissed the charges. Based upon the dismissal, the airmen then applied for an award of attorney fees and costs under EAJA.
The administrative law judge (“ALJ”) determined, among other issues, that the withdrawal of all of the FAA’s charges against the airmen resulted in the airmen being the prevailing parties in the case. The ALJ granted the airmen’s request and awarded them attorney fees and costs. However, the FAA then appealed the ALJ’s decision to the full Board.
The issue on appeal was whether or not the airmen could be considered “prevailing parties” entitled to an EAJA award. The FAA argued that the airmen were not prevailing parties because a prevailing party is one who received an enforceable judgment on the merits of a case, or who obtained a court-ordered consent decree that resulted in a change in the legal relationship between the parties. Since the ALJ did not issue a decision on the merits of the case, and the legal relationship between the FAA and the airmen did not change, the FAA claimed the airmen were not prevailing parties. The airmen opposed the FAA’s appeal arguing that the case law, legislative history and NTSB’s own procedural rules supported the ALJ’s decision that they were prevailing parties.
The Board initially observed that its case law concerning prevailing party status under EAJA “may need clarification.” After briefly discussing recent NTSB decisions addressing the “prevailing party” issue, the Board then noted several policy considerations that would be impacted by its decision. On the one hand, if an airman is unable to seek fee recovery under EAJA when the FAA dismisses its case prior to hearing, the airman will suffer financial hardship in having to defend against a meritless case pursued by the FAA. Alternatively, if an airman is allowed to pursue fee recovery when the FAA has withdrawn its charges, the FAA might be disinclined to withdraw any case or charge where the matter would still need to be litigated at considerable time and expense as an EAJA case. Or, the FAA might be inclined to continue to pursue a case if withdrawal would increase its exposure to an EAJA award, because the ALJ could interpret the withdrawal as an indication the FAA was not substantially justified in pursuing the case.
However, the Board went on to state that it did not have to take a position on the policy considerations because the case could be decided as a matter of “purely legal interpretation.” The Board then agreed with the FAA and held that the airmen did not satisfy the prevailing party standard because the airmen did not receive an enforceable judgment on the merits of their case, nor did they obtain a court-ordered consent decree that resulted in a change in the legal relationship between the airmen and the FAA.
Specifically the Board found that the airmen did not prevail on any portion of the merits of the case because the FAA withdrew the charges before the ALJ could hold a hearing. It further noted that the ALJ’s order dismissing the case merely accepted the FAA’s withdrawal of the charges against the airmen and was not the same as a court-supervised consent decree. Finally, the Board observed that the ALJ did not dismiss the case with prejudice or in any way alter the relationship between the FAA and the airmen. The Board then concluded that “[w]e believe ourselves compelled to find that the Administrator’s withdrawal of the complaint does not confer prevailing party status on applicants under the EAJA.”
Interestingly, Member Sumwalt did not concur in the decision and actually went so far as to issue a dissenting, and rather scathing, statement in connection with the Board’s decision. He began by stating that “[i]n practical effect, however, the majority rejects the Congressional intent behind the EAJA, as well as the express language of the Board’s own rules” and “[i]n so doing, the majority closes the door to relief not only on the applicants before it, but quite possibly on hundreds – if not thousands – of similarly-situated applicants to come.”
In addition to reviewing pertinent legislative history, Member Sumwalt went on to observe that Section 826.24(c) of the Board’s Rules Implementing EAJA “clearly and unmistakably” recites “that a ‘voluntary dismissal’ constitutes the ‘final resolution of a proceeding’ upon which a prevailing party may initiate an EAJA claim.” He then observed that “[i]t is reasonable to argue that this language was intentional, and – given the nature of proceedings before the board – foresaw the need for EAJA claims arising out of voluntary dismissals by the FAA or other primary enforcement agency.”
In addressing the policy considerations, Member Sumwalt stated that “it was concern for protection of the rights of the private citizen against unjustified government action – not concern for the convenience or expense of the federal government itself – from which the EAJA’s enactment arose. Even upon a finding of prevailing party status, the interests of the Administrator are herein protected by proving a substantial justification for the action. In those cases in which the Administrator lacks such a justification, however, the Board should not provide an additional safe harbor from liability under the EAJA in the form of procedural sleight of hand.”
Not surprisingly, I agree with Member Sumwalt’s dissent. The Board’s decision limits the protections EAJA was intended to provide by restricting the circumstances under which an applicant may seek EAJA relief. Unfortunately, after this decision, if an airman wants any shot at an EAJA award, he or she will have to have a hearing, obtain a decision and hope the FAA does not withdraw/dismiss its case before then. By placing procedure before substance, the Board has certainly made it more difficult to ensure that the FAA is justified in pursuing its cases. It is too bad that Member Sumwalt’s voice of reason on the issue did not sway the remaining members of the Board.
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