United States Of America v. Egan Marine, Inc et al

Filing 366

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 10/2/2012:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No. 08 C 3160
Hon. Harry D. Leinenweber

EGAN MARINE CORPORATION,
Defendant.

MEMORANDUM OPINION AND ORDER
Defendant Egan Marine Corporation (“EMC”) seeks an award of
attorneys’ fees under the Equal Access to Justice Act (the “EAJA”),
28 U.S.C. § 2412.

For the reasons stated herein, EMC’s Fee

Petition is denied.
I.

BACKGROUND

The Court declines to delve into a detailed version of the
factual background in this case, as the Court provided one at an
earlier date in its entry of judgment after the bench trial.

See

United States v. Egan Marine Corp., No. 08-C-3160, 2011 WL 8144393
(N.D. Ill. Oct. 13, 2011).

Thus, an abbreviated version of the

facts follows.
On January 19, 2005, the barge EMC 423 exploded in the Chicago
Sanitary and Ship Canal near the Cicero Avenue Bridge.

At the time

of the explosion, a tugboat owned by EMC was transporting the
barge.

On the date of the explosion, EMC 423 was carrying a load

of Clarified Slurry Oil, oil that emits flammable vapors.

On this

trip, the flammable vapors ignited and exploded, sinking the EMC
423 and ultimately causing oil and oil solids to leak into the
Canal.

At the time of the incident, EMC employee Alex Oliva

(“Oliva”) was on board the EMC 423 and died as a result of the
explosion.
On June 2, 2008, the Government filed this civil suit against
EMC.

On September 12, 2011, the parties proceeded to trial.

At

trial, the Government specifically alleged two claims under the Oil
Pollution Act (the “OPA”), civil penalties under the OPA, and a
claim under the Rivers and Harbors Act.
After an eight-day bench trial, this Court entered judgment
for EMC on the Government’s two OPA claims, finding that the
Government failed to meet its burden of proof regarding EMC’s
alleged gross negligence in the incident. The Court found in favor
of the Government on the civil penalty claim, issuing a penalty of
$100,000 against EMC as a result of the oil discharge.

Finally,

the Court entered judgment in favor of EMC on the Government’s
Rivers and Harbors Act claim, determining that the Government
waived this claim by failing to address it in its post-trial
briefing.
On January 11, 2012, EMC filed this Fee Petition under the
EAJA seeking attorney’s fees and other expenses. EMC alleges it is
entitled

to

such

fees

because

the

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Government

did

not

have

substantial justification in its filing of this action and acted in
bad faith.
II.

LEGAL STANDARD

“The EAJA departs from the general rule that each party to a
lawsuit pays his or her own legal fees.”
541 U.S. 401, 404 (2004).

Scarborough v. Principi,

The EAJA provides that a district court

may award reasonable attorneys’ fees where:

(1) the party seeking

fees is a “prevailing party”; (2) the government's position was not
substantially justified; (3) no “special circumstances make an
award unjust”; and (4) the fee application submitted to the court
is within 30 days of final judgment and is supported by an itemized
statement.

28 U.S.C. §§ 2412(d)(1)(A), (B); (d)(2)(A); United

States v. Thouvenot, Wade & Moerschen, Inc., 596 F.3d 378 (7th Cir.
2010).

Costs are also available under 28 U.S.C. § 2412(a)(1).

Section

(b)

of

the

EAJA

also

provides

for

the

recovery

of

attorneys’ fees and expenses against the Government “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.”

28 U.S.C. § 2412(b).

EMC argues it is entitled to fees and expenses under both
Section (d) and Section (b) of the EAJA.

EMC argues that the

Government was not substantially justified in bringing this action
and acted in bad faith.

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The Government opposes EMC’s motion arguing, among other
things, that (1) it was substantially justified in pursuing this
lawsuit, (2) it did not act in bad faith, and (3) EMC’s request for
costs is untimely.
III.
A.

DISCUSSION

Substantial Justification

In its Petition, EMC alleges that the Government was not
substantially justified in bringing this suit.
Court’s

ruling

as

evidence

of

the

lack

of

EMC points to this
justification.

Specifically, EMC argues that the Government failed to provide any
credible evidence that the crew of the EMC 423 was using a torch on
the day of the explosion.
The Government responds arguing it was justified in its theory
based on upon “several verified and uncontested details.” U.S.A.’s
Opp. to Egan Marine’s Fee Pet. at 31. Specifically, the Government
cites justification for its position because:
1) the explosion originated in cargo hold 4;
2) Oliva was on board the EMC 423 at the time;
3) numerous law enforcement agents interviewed
relevant witnesses in the minutes and hours
after the explosion; 4) those witnesses told
them [the Government] it was possible Oliva
was using a torch to heat the cargo pump at
the time of the explosion; 5) an open flame
was observed on the EMC 423 just prior to the
explosion; and 6) a torch and propane tank
were seen by witnesses on board the EMC 423
near the cargo pump the night and morning
before the explosion.
Id.
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Under the EAJA’s substantial justification requirement, the
Government bears the burden of proving that its position was
substantially justified.

Scarborough v. Princi, 541 U.S. 401, 414

(2004); Stewart v. Astrue, 561 F.3d 679, 683 (7th Cir. 2009).

To

be “substantially justified,” the Government’s position must have
a reasonable basis in both law and fact.
U.S. 552, 565 (1988).

Pierce v. Underwood, 487

The Seventh Circuit has expanded on the

standard finding that the Government satisfies its burden if it
shows:

“1) a reasonable basis in truth for the facts alleged; 2)

a reasonable basis in law for the theory propounded; and 3) a
reasonable connection between the facts alleged and the theory
propounded.”

Conrad v. Barnhart, 434 F.3d 987, 990 (7th Cir.

2006).
EMC argues that the Government’s theory surrounding the cause
of the explosion lacks a reasonable basis in fact.

In order to

prevail on its two OPA claims, the Government had the burden to
prove, by preponderance of the evidence, that EMC caused the
explosion and was grossly negligent.

The Government’s specific

theory was that the explosion occurred because Oliva used a propane
torch to thaw a cargo pump that was frozen due to the cold weather.
The Government alleged that rather than attempting to properly heat
the pump, the crew of the EMC 423 chose to heat the pump with a
propane torch, which in turn ignited flammable vapors emanating
from the standpipe, and caused the explosion.
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At trial, the Government produced evidence that there was a
propane torch on the EMC 423 on the day of the explosion and
produced evidence that in the past, EMC crew members used a torch
on the barge.

The Government also provided testimony from one of

its experts that the presence of a propane torch on the deck of a
loaded petroleum barge is not a safe procedure.
Proceedings, ECF No. 339, Page ID # 8095964.

See Tr. of

Despite these facts,

the Court found all the evidence and testimony insufficient to
prove by a preponderance of the evidence that Oliva was using a
propane torch on the cargo pump at the time of the explosion.

See,

J., ECF No. 330 at 6-7.
EMC alleges that the Government’s position lacks justification
because the Government ignored physical evidence and testimony
which negated the possibility that Oliva caused the explosion by
using a propane torch.

However, in its reply brief, EMC admits

that Oliva was on the barge at the time of the explosion and admits
that the Government presented testimony that an eyewitness saw a
flame

somewhere

on

the

barge.

EMC

avers

that

because

the

Government did not have any eyewitnesses actually view Oliva using
a torch at the time of the explosion, and did not have any images
from one of the surveillance cameras showing Oliva using a propane
torch, that the Government’s alleged facts were substantially
unjustified.

The

Government

responds

by

admitting

it

never

purported to have “unassailable proof” that Oliva was using a torch

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at the time of the explosion.

It further states its case was based

on circumstantial evidence and that the adequacy and credibility of
the evidence was for finder of fact to determine.
“The outcome of a case is not conclusive evidence of the
justification for the government's position.”

United States v.

Hallmark

(7th

Const.

Co.,

200

F.3d

1076,

1079

Cir.

2000)

“Substantially justified” does not mean “justified to a high
degree.” The standard is satisfied if there is a “genuine dispute”
or if “reasonable persons could differ as to the appropriateness of
the contested action.”

Stein v. Sullivan, 966 F.2d 317, 320 (7th

Cir. 1992) citing Pierce, 487 U.S. at 565.

In United States v.

Pecore, the Seventh Circuit examined a district court’s denial of
attorneys’ fees under the EAJA.
1125 (7th Cir. 2011).

United States v. Pecore, 664 F.3d

In Pecore, two defendants sought fees

arguing that the government lacked substantial justification in
bringing claims against defendants under the False Claims Act (the
“FCA”).

Specifically, the defendants alleged that because the

government failed to “articulate a reasonable motive” for filing a
false claim, the government could not possibly prove they lied.
Pecore, 664 F.3d at 1133.

Rejecting this argument, the Seventh

Circuit noted that while the defendants attempted to show that this
was an uncontested trial issue, it was actually an issue “subject
to conflicting evidence and testimony such that a reasonable person
could have accepted either version of the events.”
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Id. at 1134.

The Seventh Circuit held this sufficient to show the government was
substantially justified.

Id.

The Court finds Pecore similar to the present case, and
reiterates that its opinion rested largely on the Government’s
failure to prove its theory by a preponderance of the evidence.
See J., ECF No. 330 at 9.
Government’s

OPA

claims,

Moreover, in holding for EMC on the
this

Court

also

found

credibility of the Government’s experts persuasive.

the

lack

of

See id. at 7

“[W]hen the resolution of a case hinges to such an extent on
determination of witness credibility, it is an abuse of discretion
to find that the government’s position was not substantially
justified.”
1993).

Wilfong v. United States, 991 F.2d 359, 368 (7th Cir.

Thus, the Court finds that the Government has met its

burden proving that its position carried a reasonable basis in both
law and fact such that pursuant to EAJA it was substantially
justified in bringing its OPA claims against EMC.
It

is

also

worth

mentioning

that added

support

for

the

Government’s justification lies in the fact that the Government’s
evidence

and

theories

survived

the

pleading

stages

in

this

litigation. “There is a [rebuttable] presumption that a government
case strong enough to survive both a motion to dismiss and summary
judgment is substantially justified.” Thouvenot, Wade & Moerschen,
Inc., 596 F.3d at 382.

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EMC argues that the Government’s justification was not tested
in either its motion to dismiss or with regards to ExxonMobil’s
motion for summary judgment. EMC contends that since its motion to
dismiss involved only the Government’s River and Harbors Act claim,
and the motion for summary judgment was ExxonMobil’s motion, the
presumption
acknowledges

of

justification

EMC’s

points,

Thouvenot persuasive.

does

but

not

still

apply.

finds

the

The

Court

language

in

In Thouvenot, the Seventh Circuit held,

“[g]iven the Supreme Court’s insistence in its recent Bell Atlantic
and Iqbal decisions that a case must be dismissed if the complaint
does not appear to have a substantial basis, and given that summary
judgment

resolves

cases

that

though

not

frivolous

would

not

persuade a reasonable jury, a case that is allowed to go all the
way to trial is likely to be a toss-up.”
omitted).

Id. at 382 (citations

EMC alleges that at trial there “was a complete absence

of credible evidence to support the Government’s theory.”
Reply in Supp. of Fee Pet. at 20.

EMC’s

The Court finds these bold

assertions strange in light of the fact that EMC chose not to file
a summary judgment motion or a motion to dismiss on either of the
Government’s OPA claims.
B.

28 U.S.C. § 2412(b)

EMC also argues it is entitled to fees under Section 2412(b)
of

the

EAJA

because

the

Government

acted

in

bad

faith.

Specifically, EMC alleges that the Government acted in bad faith in
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“aggressively pursuing its meritless claim that the explosion was
caused by the use of a torch.”

EMC’s Reply in Supp. of Fee Pet. at

2.
Section 2412(b) of the EAJA makes the Government liable for
fees “to the same extent that any other party would be liable under
common law.”

28 U.S.C. § 2412(b).

“The federal common law of

attorneys’ fee awards is the “American rule”, under which each
party to a lawsuit bears his own expenses of suit unless the
“losing party ‘has acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.’”

Stive v. United States, 366 F.3d 520,

521 (7th Cir. 2004) citing Muslin v. Frelinghuysen Livestock
Managers, Inc., 777 F.2d 1230, 1235 (7th Cir. 1985).

Bad faith is

not expressly defined in the EAJA.
In Mallette v. Sullivan, the court examined a litigant’s claim
for attorney’s fees under 2412(b).

It held that the litigant was

not entitled to fees under 2412(b) because bad faith required
something

more

than

unreasonableness.

Mallette

v.

Sullivan,

No. 87-C-4873, 1990 WL 19894, at * 9-10 (N.D. Ill. Feb. 15, 1990).
When making this finding, the court compared the facts before it
with two cases where bad faith was found under the EAJA.

In

Mallette, the court stated, “the petitioner’s bad-faith argument,
in essence, focuses on the unreasonableness of the government’s
legal position.

She points to no conduct which even closely

resembles the distinctly oppressive tactics which were punished in
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Baker and Aero Corp.”

Id.

In Baker v. Bowen, the government

failed to review the evidence presented at a hearing which was in
direct violation of their statutory obligations, and upon realizing
their error, tried to cover it up.

Baker v. Bowen, 839 F.2d 1075,

1080-82 (5th Cir. 1988) (overruled on other grounds).

In Aero

Corporation v. Department of Navy, the Navy not only failed to
follow the law, but also violated court orders.

Aero Corporation

v. Department of Navy, 558 F.Supp. 404, 418-21 (D.D.C. 1983).
The Court finds the litigant’s argument in Mallette similar to
EMC’s argument regarding the Government’s alleged bad faith. Here,
EMC alleges that it is entitled to fees under 2412(b) for the same
reason that it argued it was entitled to fees under 2412(d) - that
is, because the Government pursued an allegedly meritless claim.
Because the Court has already determined that the Government was
substantially justified in making its OPA claims against EMC, the
Court does not find that the Government acted in bad faith in doing
so, and further finds that EMC failed to present the Court any
evidence suggesting the Government violated the law or violated any
Court orders in pursuing its claims.
C.

Costs

To the extent that EMC petitioned this Court for costs and
other expenses, the Court denies this request as untimely.
Section (a) of the EAJA provides: “[e]xcept as otherwise
specifically

provided

by

statute,
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a

judgment

for

costs,

as

enumerated in section 1920 of this title, but not including fees
and expenses of attorneys, may be awarded to the prevailing party
in any civil action brought by or against the United States. . . .”
28 U.S.C. § 2412 (a) (1).

In Commissioner v. Jean, the Supreme

Court stated, “while the parties’ postures on individual matters
may be more or less justified, the EAJA – like other fee-shifting
statutes – favors treating a case as an inclusive whole, rather
than as atomized line-items.”

Commissioner v. Jean, 496 U.S. 154,

161-62 (1990). Recognizing this, the Seventh Circuit, in Gatimi v.
Holder, denied a litigant’s request for costs, noting that the
requests for costs were untimely.

“Rule 39(d)(1) of the Federal

Rules of Appellate Procedures provides that a party who wants costs
taxed must – within 14 days after entry of judgment – file with the
circuit clerk, with proof of service an itemized and verified bill
of costs.”

Gatimi v. Holder, 606 F.23d 344, 350 (7th Cir. 2010)

citing FED. R. APP. P. 39(d)(1).

While the litigant in Gatimi

argued that its request for costs were timely because of the EAJA’s
final judgment rule, the Seventh Circuit rejected this argument
stating “entry of judgment is not the same thing as final judgment.
Rule 36 says that “a judgment is entered when it is noted on the
docket.””

Id. citing FED. R. APP . P. 36 (a).

Similar to Rule 39

which governs the time litigants have to file requests for costs

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after an appeal, Local Rule 54.1(a) governs the time litigants have
to file requests for costs after trial.

Rule 54.1 states:

[w]ithin 30 days after entry of judgment, under which
costs may be claimed, the prevailing party shall file a
bill of costs with the clerk and serve a copy on each
adverse party. If the bill of costs is not filed within
30 days, costs other than those of the clerk, taxable
pursuant to 28 U.S.C. §1920 shall be deemed waived.
Local Rule 54.1 (a).
In this case, the Court entered its judgment on October 13,
2011.

ECF No. 330.

EMC filed its Fee Petition January 11, 2012.

This exceeds the 30-day time frame permitted to requests costs
under the Local Rule.

Thus, EMC’s request for costs is also

denied.
IV.

CONCLUSION

Therefore, for the foregoing reasons, Defendant’s fee petition
under 28 U.S.C. § 2412 is denied.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE:10/2/2012

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