As you may recall from previous articles, if the FAA pursues an enforcement or civil penalty action and then loses, the Equal Access to Justice Act (“EAJA”) allows a certificate holder or target of the civil penalty action to seek reimbursement from the FAA for the attorney’s fees and expenses incurred by the certificate holder or target of the civil penalty action to defend against the claims asserted by the FAA. 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 award EAJA fees to a certificate holder or target of a civil penalty action who is requesting reimbursement of fees (the “Applicant”), one of the issues an administrative law judge ("ALJ") must decide is whether the fees were actually “incurred” by the Applicant. In a situation where the Applicant has paid an attorney for representation throughout the enforcement process out of the Applicant’s own pocket, this is easy. Conversely, when an Applicant’s employer or union pays the fees then the Applicant did not incur the fees for purposes of EAJA. However, if the employer advances the fees and the Applicant is obligated to repay those fees regardless of the outcome of the action, then the Applicant would also be considered to have incurred the fees.
Also, it may be possible for an Applicant to incur fees by retaining an attorney on a contingent fee basis under which the attorney would only receive payment in the event of an EAJA recovery. However, this type of arrangement must be documented at the time the attorney is retained in order for it to qualify under EAJA. In general, documentation of the payment of, or obligation for, the fees is critical to recovery under EAJA.
But what if an applicant doesn't have documentation to show an agreement to pay or be responsible for payment to the attorney who represented the Applicant before the Board? Well, a recent decision by the United States Court of Appeals in the District of Columbia addressed this very issue.
In Roberts v. National Transportation Safety Board the Court was asked to review a decision by the Board affirming an ALJ's rejection of Mr. Roberts' EAJA application on the basis that Mr. Roberts had not actually "incurred" attorney's fees. The ALJ found that Mr. Roberts' attorney also represented his employer and, in the absence of any written agreement between Mr. Roberts and either his employer or the attorneys to the contrary, the ALJ concluded that Mr. Roberts' employer had paid the attorneys. As a result, the ALJ held that Mr. Roberts had not personally incurred the attorney's fees as required by EAJA. The Board then affirmed the ALJ's decision, even though it reversed the ALJ's earlier finding that the employer had agreed to pay for Mr. Roberts' attorney's fees.
On appeal to the Court of Appeals, Mr. Roberts argued that the Board's determination that he had not personally incurred the fees was arbitrary and capricious. The Court agreed and found that the Board's refusal to consider that Mr. Roberts may have been obligated to pay attorney's fees under a quantum meruit theory (also called an implied contract theory) was arbitrary and capricious. The Court observed that Alabama law (the state law applicable to any relationship Mr. Roberts had with his attorney) implies a promise to pay compensation for services rendered to another that are knowingly accepted even in the absence of a valid written contract. The Court went on to observe that the Board's conclusion that Mr. Roberts had not proven that he was responsible for attorney's fees because the attorney's invoices didn't clearly say so defied logic. And the Court determined the Board's reliance upon the absence of an express contract as dispositive was in error.
However, although the Court held that Mr. Roberts had incurred attorney's fees, it noted that all of the fees and expenses claimed by Mr. Roberts may not necessarily be eligible for reimbursement. The Court remanded the case back to the NTSB for it to consider which submitted fees and expenses were supported by sufficient documentation and whether any reduction in award is appropriate.
This decision will certainly help anyone applying for an EAJA award after having to defend themselves against an unjustified certificate or civil penalty action. However, properly documenting both the obligation to pay fees, as well as the amount of the fees is still recommended. But at least the Court's decision provides the opportunity for an applicant to claim fees have been incurred even in the absence of a written agreement. And that's a "win" in my book.
A recent NTSB decision illustrates, once again, how difficult it can be for an airman who successfully defends against the FAA to obtain an award of attorney fees under the Equal Access to Justice Act ("EAJA"). In Administrator v. Kamm the FAA alleged the airman violated FARs 91.155(a) and 91.13(a) when he allegedly operated a passenger-carrying flight under visual flight rules ("VFR") through clouds in Alaska. After a hearing, the administrative law judge ("ALJ") concluded that video and photographic evidence, as well as the testimony presented by the FAA, failed to prove it's case because none of the evidence showed the aircraft flying through clouds. Not only did all four of the tourist passengers testify that the aircraft did not fly through clouds, the ALJ also found the testimony of two FAA inspectors who were passengers on the flight to be unreliable.
The ALJ noted inconsistencies between the inspectors' written statements, drafted approximately two weeks following the flight at issue, and their testimony at the hearing. He also found that the inspectors' stories were not corroborative because one inspector stated the aircraft's left wing disappeared into clouds for a matter of moments on two specific instances but the other inspector stated that the aircraft flew through small clouds approximately eight times during the flight.
As a successful party, the airman then applied for an award of attorney fees under EAJA. However, the ALJ denied the fee request finding the FAA was substantially justified in pursuing the case. The ALJ rejected the airman's argument that based upon the evidence and testimony, a fee award was appropriate because the FAA shouldn't have pursued the case at all. The ALJ stated that a hearing was necessary to assess the reliability and credibility of the inspectors' and other witnesses' testimony. The airman then appealed the denial to the NTSB.
On appeal, the airman argued the ALJ erred in finding the FAA's pursuit of the underlying case was reasonable and that the FAA should have known the inspectors' recollections of the flight were inconsistent and, as a result, it should have abandoned the case before the hearing. With respect to the first argument, the Board observed that the FAA is substantially justified in pursuing a complaint if key factual issues hinge on witness credibility. Since the ALJ's decision hinged on his credibility findings at the hearing, the Board found it was reasonable for the FAA to pursue the case against airman.
In analyzing the airman's second argument, the Board initially observed that the FAA will be liable for an award of attorney fees under EAJA if the FAA does not abandon the investigation of a case when it knows or should know the case is neither reasonable in fact nor law. Next, the Board noted the FAA's investigation of the case included reviewing the physical evidence and interviewing the witnesses, including the four tourist passengers and only then did it decide to pursue the case against the airman. As a result, the Board found the FAA did not disregard or fail to give meaningful consideration to the airman's defense. It then concluded by stating "[g]iven the evidence before the Administrator, consisting of photographs and the first-hand observations of experienced FAA inspectors, we find the Administrator's pursuit of the case was reasonable."
This case highlights the high hurdle applicant's must vault in order to show that the FAA was not substantially justified in pursuing it's case. But if the FAA's own employees/witnesses can't get their stories straight, I'm not sure how it can be justified in pursuing your case. Unfortunately, when the ALJ couches his decision in terms of credibility, as is the case more and more often, it can be very difficult to win an EAJA attorney fee award.
The United States Court of Appeals for the D.C. District recently reversed the FAA Administrator's determination that an applicant seeking attorney's fees under the Equal Access to Justice Act ("EAJA") was not a prevailing party after the FAA withdrew its complaint before hearing, even though an ALJ then entered an order dismissing the case with prejudice. In Green Aviation Management Co., LLC v. Federal Aviation Administration, the FAA filed a complaint alleging that Green Aviation operated a flight with 10 passengers when the aircraft was only approved for 9 passengers. The FAA was seeking to assess a $33,000 civil penalty against Green.
Prior to the hearing, the FAA withdrew its complaint. Based upon the FAA's withdrawal, the ALJ entered an order dismissing the case with prejudice as required by 14 C.F.R. § 13.215. Green Aviation then submitted an EAJA application for attorney's fees. Although the ALJ found that Green Aviation was a prevailing party, as required by EAJA, he nonetheless found that the FAA was substantially justified in pursuing its case and, as a result, the ALJ denied Green Aviation's EAJA application.
Green Aviation appealed the ALJ's denial to the FAA Administrator. However, contrary to the ALJ, the Administrator determined that Green Aviation was not a prevailing party. The Administrator reasoned that the ALJ's dismissal was required by the regulations and, since the ALJ had no discretion, his order did not make Green Aviation a prevailing party. Green Aviation then appealed the Administrator's decision to the D.C Circuit.
On appeal, the Court initially observed that a prevailing party in an EAJA fee case must meet two requirements: the judgment must be in favor of the party seeking the fees; and the judicial pronouncement must be accompanied by judicial relief. The Court found that the ALJ's dismissal order easily satisfied the first requirement.
With respect to the second requirement, the noted that the ALJ's dismissal order was "with prejudice", which resulted in a "res judicata effect" on the parties. That is, it protected Green Aviation from having to pay damages or alter its conduct based upon the same facts and circumstances alleged in the FAA's withdrawn complaint. The Court observed "[t]he dismissal order is thus not a mere formality or a housekeeping measure; rather it is the means by which Green Aviation can obtain res judicata protection."
The Court concluded that Green Aviation obtained sufficient judicial relief to be a prevailing party. As a result, the Court sent the case back to the FAA Administrator to determine whether the FAA's filing of its complaint against Green was substantially justified. If it was not, Green should be entitled to an award of attorney's fees under EAJA.
This is a great decision for parties facing unjustified civil penalty actions. Although it may not prevent the FAA from withdrawing a complaint on the eve of hearing, after a respondent has incurred significant fees, it does allow a respondent the opportunity to hold the FAA accountable.