Pierce v. Underwood

PETITIONER: Pierce
RESPONDENT: Underwood
LOCATION: Middle District Court of Tennessee

DOCKET NO.: 86-1512
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 487 US 552 (1988)
ARGUED: Dec 01, 1987
DECIDED: Jun 27, 1988

ADVOCATES:
Mary S. Burdick - on behalf of the Respondent
Thomas W. Merrill - on behalf of Petitioner

Facts of the case

Question

Media for Pierce v. Underwood

Audio Transcription for Oral Argument - December 01, 1987 in Pierce v. Underwood

Audio Transcription for Opinion Announcement - June 27, 1988 in Pierce v. Underwood

Antonin Scalia:

Finally, Pierce versus Underwood comes to us on writ of certiorari to the Court of Appeals for the Ninth Circuit.

One of the petitioner's predecessors as Secretary of Housing and Urban Development decided not to implement a program authorized by federal statute, which was intended to provide payments to owners of Government-subsidized apartment buildings in order to offset rising utility expenses and property taxes.

Various plaintiffs, including respondents who are members of a nationwide class of housing tenants, successfully challenged that decision in lawsuits filed in nine different Federal District Courts.

After two of these District Court decisions were affirmed on appeal, a newly appointed Secretary of HUD settled with most of the plaintiffs including respondents.

While the settlement was being administered, Congress passed the Equal Access to Justice Act (EAJA), which authorizes an award of attorney's fees against the Government, “unless the court finds that the position of the United States was substantially justified”.

The District Court in this case awarded attorney's fees to respondents under the EAJA concluding that the Secretary's decision not to implement the operating-subsidy program had not been substantially justified.

The Ninth Circuit affirmed and we granted the Government's petition for certiorari.

The case raises four separate issues.

First, what standard of review should the Court of Appeals use when reviewing a District Court's determination that the Government's position was or was not substantially justified.

We conclude that the Ninth Circuit was correct in applying the deferential abusive-of-discretion standard rather than applying the de novo standard and giving the determination plenary review.

Deferential review was suggested by the EAJA's language structure and as a matter of sound judicial administration.

The next question is, what does the phrase “substantially justified” mean as used in the EAJA.

The word “substantial” can have two quite different connotations.

On the one hand, it could mean considerable in amount or large, on the other hand, it can mean for the most part or in the main, as for example, in the statement what he said was substantially true.

We conclude that this latter connotation is correct and that substantially justified means justified in substance or in the main that is justified to a degree that would satisfy a reasonable person.

This interpretation accords with related uses of the term substantial and is the standard that has been adopted by the vast majority of the Courts of Appeals.

The third question is, did the District Court abuse its discretion in deciding that the Secretary's position in this case was not substantially justified.

We conclude that it did not.

The Government's arguments on the merits of the underlying issue do not command the conclusion that its position was substantially justified, therefore, the award of attorney's fees is affirmed.

Finally, we turned to the problem of calculating the amount of attorney's fees.

The EAJA provides that fees awarded must “be based upon prevailing market rates for the kind and quality of the services furnished except that fees shall not be awarded in excess of $75 per hour, unless the Court determines that an increase in the cost of living or a special factor such as the limited availability of qualified attorneys for the proceedings involved justifies a higher fee."

We conclude that the District Court abused its discretion in awarding fees at a rate in excess of $75 per hour adjusted for inflation.

In order to give any substantial effect to the statute's $75 cap on fees, the special factors referred to in the statute must be such as are not of broad and general application.

The factors relied on by the District Court here such as the work and ability of counsel and the contingent nature of the fee do not qualify.

We therefore affirm in part, vacate in part and remand.

The Chief Justice and Justice Stevens joined the opinion of the Court.

Justice Brennan has filed an opinion concurring in part and concurring in the judgment in which Justices Marshall and Blackmun joined.

Justice White has filed an opinion concurring in part and dissenting in part in which Justice O'Connor joins.

Justice Kennedy took no part.