Overstreet v. Farm Fresh Company Target One LLC

Filing 54

ORDER granting Respondent Farm Fresh Company Target One LLC's Motion for Reconsideration (Doc. 51 ). The Order of 08/11/14, is vacated (Doc. 50 ). FURTHER ORDERED that Respondent shall resubmit its fee application by 09/19/14. Petitioner may file an objection by 10/03/14. See order for details. Signed by Judge Neil V. Wake on 9/4/14. (NKS)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Cornele A. Overstreet, Petitioner, 10 11 ORDER v. 12 No. CV-13-02358-PHX-NVW Farm Fresh Company Target One, LLC, 13 Respondent. 14 15 Before the Court are Respondent Farm Fresh Company Target One LLC’s Motion for 16 Reconsideration (Doc. 51) and Petitioner Cornele A. Overstreet’s Response (Doc. 53). Rules 17 of Practice in the District of Arizona allow reconsideration on a showing of manifest error. 18 See LRCiv 7.2(g)(1). Likewise, Federal Rule of Civil Procedure 60 allows the Court to 19 relieve a party from an order for any reason that justifies relief. Because the August 11, 2014 20 Order denying fees erred in defining “prevailing party” too narrowly, the Court will grant the 21 Motion and assess fees against Petitioner under the Equal Access to Justice Act (EAJA), 28 22 U.S.C. § 2412. 23 As noted in the August 11 Order, a party prevails within the meaning of federal fee- 24 shifting statutes if “(1) it secures a material alteration in the legal relationship of the parties 25 and (2) that alteration is judicially sanctioned.” Poland v. Chertoff, 494 F.3d 1174, 1186 (9th 26 Cir. 2007) (citing Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human 27 Res., 532 U.S. 598, 694 (2001)). Although the Supreme Court articulated this formulation 28 for plaintiffs seeking fees, see Buckhannon, 532 U.S. at 600–01 (plaintiffs brought suit under 1 Fair Housing Amendments Act of 1988 and the Americans with Disabilities Act of 1990), 2 the EAJA itself contemplates fee awards to private defendants. 3 § 2412(d)(1)(A) (allowing fee shifting in civil actions “brought by or against the United 4 States”); see also Ardestani v. INS, 502 U.S. 129, 138 (1991) (“The clearly stated objective 5 of the EAJA is to eliminate financial disincentives for those who would defend against 6 unjustified governmental action and thereby to deter the unreasonable exercise of 7 Government authority.”) (emphasis added). See 28 U.S.C. 8 Nonetheless, the Supreme Court’s material-alteration formulation fits awkwardly 9 when a party successfully defends itself against the government rather than sues for 10 affirmative relief. Maintaining the status quo and preventing a material alteration of its legal 11 relationship with the government may be a defendant’s only goal. The awkward fit is 12 aggravated when the government wins part of the relief it seeks. That was the case here. 13 Petitioner obtained injunctive relief because he demonstrated likely success on proving 14 unfair labor practices, but the relief was limited. The injunction did not require unconditional 15 reinstatement as Petitioner requested. 16 Faced with EAJA precedent largely adapted to suit cases involving fee-seeking 17 plaintiffs, see, e.g., Perez-Arellano v. Smith, 279 F.3d 791 (9th Cir. 2002) (applying 18 Buckhannon’s prevailing party formulation to the EAJA where plaintiff sued the INS seeking 19 review of an adverse citizenship determination), this Court adopted a bright-line test, looking 20 to whether Farm Fresh defeated a separate and distinct claim. See Hensley v. Eckerhart, 461 21 U.S. 424, 434–36, 440 (1983). Because the Court could not conclude that the differences 22 between the remedy Petitioner obtained and the remedy Farm Fresh defeated were so great 23 as to constitute a distinct claim, fees were denied. 24 In its Motion to Reconsider, however, Farm Fresh offers an approach that is more 25 pragmatic and better suited to the EAJA’s remedial aims. Essentially, Farm Fresh argues 26 that a defendant obtains sufficient relief to “prevail” if it wins a significant issue that provides 27 some benefit—even if the government wins on other issues. 28 -2- 1 Farm Fresh cites to precedent with helpfully broad language. See Buckhannon, 532 2 U.S. at 604 (“A ‘prevailing party’ is one who has been awarded some relief by a court.”); 3 Hensley, 461 U.S. at 433 (“A typical formulation is that plaintiffs may be considered 4 prevailing parties for attorneys’ fees purposes if they succeed on any significant issue in 5 litigation which achieves some of the benefit the parties sought in bringing suit. This is a 6 generous formulation that brings the plaintiff only across the statutory threshold. It remains 7 for the district court to determine what fee is reasonable.”) (citations and quotation marks 8 omitted); Poland, 494 F.3d at 1187 (finding actionable claim for retaliation and noting that if 9 plaintiff “obtains any form of relief on remand, he will have secured a material change in the 10 legal relationship between himself and [defendant],” entitling him to EAJA fees). 11 But it is an unpublished district court opinion from the Western District of Michigan 12 that persuasively applies Farm Fresh’s test to similar facts. There, the NLRB similarly filed 13 a 10(j) petition for injunctive relief pending administrative adjudication of a company’s 14 unfair labor practices. The company, CLS, had barred union representatives from its plant 15 and refused to bargain. The NLRB sought three forms of relief against CLS: (1) allow union 16 access to the plant, (2) bargain with the union, and (3) provide the union with information for 17 contract negotiations. The district court granted relief in part and denied it in part. The court 18 held that allowing the union access to CLS’s plant would return the status quo before the 19 company refused to recognize the union. But the court determined that forcing CLS to 20 bargain with the union would go too far. It concluded: 26 As a result of its analysis, the Court finds that Petitioner has met his burden of establishing reasonable cause that an unfair labor practice has occurred. The Court further finds that it is just and proper to issue a limited preliminary injunction requiring CLS to allow [union] representatives access to their employees and plant to process grievances and represent employees. . . . However, the Court does not find it just and proper to require CLS to bargain with the [union] or provide information for contract negotiations. Nor will dues have to be paid to the [union]; these dues may be kept in escrow until the NLRB issues its [administrative] decision. 27 Boren v. Cont’l Linen Servs., Inc., 1:10-CV-562, 2010 WL 2901872, at *1, *6 (W.D. Mich. 28 July 23, 2010). 21 22 23 24 25 -3- 1 Subsequently, an ALJ concluded that the union was not the employees’ representative 2 and recommended dismissing the administrative complaint. The district court dismissed the 3 10(j) petition with prejudice pursuant to a stipulation. CLS moved for fees. The NLRB 4 opposed and made the same argument made here: Because the government obtained some 5 injunctive relief, the respondent company did not prevail within the meaning of the EAJA. 6 The court rejected this argument because CLS’s success “was not insignificant. These issues 7 were central to the NLRB’s 10(j) petition. CLS prevented Plaintiff from obtaining a material 8 alteration in the legal relationship of the parties.” Boren ex rel. NLRB v. Cont’l Linen Servs., 9 Inc., 1:10-CV-562, 2011 WL 2261537, at *1–2 (W.D. Mich. June 8, 2011). The court 10 expressly disclaimed the voluntary dismissal as justification for the fee award and relied 11 instead on CLS’s success defending against the 10(j) petition. See id. at *2 n.4. 12 The district court’s analysis turns on a sensible interpretation of Buckhannon when 13 the fee claimant is a defendant. If a party prevails by winning a judicially sanctioned 14 material alteration in the legal relationship, then defeating such an alteration must also be 15 sufficient. To interpret “prevailing party” otherwise would read into the EAJA a bias against 16 defendants. It would ignore the Supreme Court’s admonition that the EAJA must be “read in 17 light of its purpose to diminish the deterrent effect of seeking review of, or defending against, 18 governmental action.” Sullivan v. Hudson, 490 U.S. 877, 890 (1989) (quotation marks 19 omitted).1 20 Admittedly, this approach invites difficult line drawing in certain cases. Where a 21 non-governmental defendant prevails on some issues but not others, a fee award must turn on 22 principled comparison of the parties’ relative success. Only substantial victory will merit 23 fees. See Hensley, 461 U.S. at 433 (requiring success on “any significant issue in litigation”) 24 (emphasis added); Cont’l Web Press, Inc. v. NLRB, 767 F.2d 321, 323 (7th Cir. 1985) (“[A] 25 1 26 27 28 Two years after Sullivan, the Supreme Court declined to expand application of the EAJA through a “functional interpretation” that would serve its broad purposes. Ardestani v. INS, 502 U.S. 129, 137–38 (1991). But unlike here, the Ardestani plaintiff sought an interpretation of the EAJA at odds with its plain language. See id. at 138 (“[W]e cannot extend the EAJA to administrative deportation proceedings when the plain language of the statute, coupled with the strict construction of waivers of sovereign immunity, constrain us to do otherwise.”). -4- 1 party ‘prevails’ if he wins a substantial part of what he sought.”), abrogated on other 2 grounds by Jean, 496 U.S. 154. Thus, only where the defendant defeats an attempt to 3 materially alter the legal relationship, and the defeat is substantial, may a defendant obtain 4 fees against a governmental entity that nonetheless obtained some of the success it sought.2 5 Petitioner does not cite to Ninth Circuit authority foreclosing this test. Indeed, rather 6 than disputing the Boren approach, Petitioner distinguishes it by minimizing Farm Fresh’s 7 victory. Like Boren, Petitioner demonstrated likely success at proving unfair labor practices 8 and obtained limited injunctive relief. But also like Boren, the terms of relief Petitioner 9 sought went too far. It would not have been just and proper to order reinstatement on 10 Petitioner’s terms. As discussed below, it would have been unjust. Farm Fresh’s success, 11 like CLS’s, was significant because unconditional reinstatement was central to the 10(j) 12 petition. Even though the government obtained relief, Farm Fresh’s victory was substantial 13 enough to make it a prevailing party. 14 Thus, Farm Fresh is entitled to its fees if “the government fails to show that its 15 position was substantially justified or that special circumstances make an award unjust” and 16 “the requested fees and costs are reasonable.” Carbonell v. INS, 429 F.3d 894, 898 (9th Cir. 17 2005). “Substantial justification under the EAJA means that the government’s position must 18 have a reasonable basis in law and fact. Substantial justification does not mean justified to a 19 high degree, but simply entails that the government must show that its position meets the 20 traditional reasonableness standard.” Corbin v. Apfel, 149 F.3d 1051, 1052 (9th Cir. 1998) 21 (citations and quotation marks omitted). 22 23 24 25 Here the government’s position was not reasonable. As stated in the Court’s March 6 2014 Order granting in part and denying in part the 10(j) petition, Petitioner’s demand that the discharged employees be reinstated and be exempt from Respondent’s verification of their legal status under E-Verify is contrary to law . . . . Respondent has offered since May 2013 to reinstate the 26 27 28 2 Of course, prevailing party status is only a threshold inquiry. The government is exposed to fee awards only for litigation that is not substantially justified. This protection ensures that adopting the Boren approach will not chill the government’s legitimate enforcement attempts. -5- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 employees, subject to their passing E-Verify, which would have been done by now but for Petitioner’s illegal additional demand that they be retained even if they are not confirmed by E-Verify. Doc. 36 at 1–2. Opposing Farm Fresh’s initial fee request, Petitioner argued he “never demanded that the Company refrain from E-Verifying those individuals once they had been reinstated.” Doc. 45 at 6. This revisionist history contradicts the record as articulated in the March 6 Order. Farm Fresh and the Court reasonably understood Petitioner to demand reinstatement without subsequent confirmation through E-Verify. At oral argument on the 10(j) petition, counsel for Petitioner was given the opportunity but declined to retract that position. Petitioner’s demand contravened Arizona law. A.R.S. § 23-214(A) (mandating that “every employer, after hiring an employee, shall verify the employment eligibility of the employee through the e-verify program”). It also foreclosed a remedy that was consistent with Supreme Court precedent. Cf. Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 902–03 (1984) (“[T]he implementation of the Board’s traditional remedies at the compliance proceedings must be conditioned upon the employees’ legal readmittance to the United States. . . . By conditioning the offers of reinstatement on the employees’ legal reentry, a potential conflict with the INA is thus avoided.”). It was not substantially justified. See Meinhold v. U.S. Dep’t of Defense, 123 F.3d 1275, 1278 (9th Cir. 1997) (“If the government’s position violates the Constitution, a statute, or its own regulations, a finding that the government was substantially justified would be an abuse of discretion.”). Because there are no “special circumstances mak[ing] an award unjust,” 28 U.S.C. § 2412(d)(1)(A), Farm Fresh is entitled to EAJA fees. However, the Court does not make a finding as to bad faith and will not grant fees under 28 U.S.C. § 1927 or its inherent authority. Farm Fresh’s fee award is awarded only under and thus constrained by the EAJA, including its statutory hourly maximum rate. See 28 U.S.C. § 2412(d)(2)(A). Moreover, Farm Fresh’s request, seeking 95 percent of its discounted fees, was not reasonable. Farm Fresh is entitled to fees expended on the reinstatement issue even if those fees also went to losing battles. But it does not get fees -6- 1 expended only on issues lost. Farm Fresh will therefore be ordered to resubmit its fee 2 application, itemizing and subtracting time not expended on defending against Petitioner’s 3 reinstatement demand. Further, Farm Fresh must calculate its requested fees using the 4 current statutory maximum allowed under the EAJA. Petitioner may object that any time 5 included in the calculation was pertinent only to the issues decided favorably to the 6 government. 7 IT IS THEREFORE ORDERED granting Respondent Farm Fresh Company Target 8 One LLC’s Motion for Reconsideration (Doc. 51). The Order of August 11, 2014, is vacated 9 (Doc. 50). 10 11 12 IT IS FURTHER ORDERED that Respondent shall resubmit its fee application by September 19, 2014. Petitioner may file an objection by October 3, 2014. Dated this 4th day of September, 2014. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7-

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