Fairholme Funds, Inc. v. United States
132 Fed. Cl. 391
| Fed. Cl. | 2017Background
- Plaintiffs (Fairholme Funds, Inc. et al.) moved to compel production of documents the United States withheld as privileged (presidential communications, deliberative process, bank examination); the district court reviewed 56 documents in camera and ordered production in full.
- The government sought mandamus review in the Federal Circuit as to 16 documents; the Federal Circuit granted relief as to 8 documents and left the remainder producible.
- Plaintiffs sought attorney’s fees under RCFC 37(a)(5)(C) for the costs of litigating the motion to compel; they proposed a lodestar multiplied by a "win ratio" (86%) to calculate recovery ($211,556.13 claimed).
- The government argued no fees should be awarded because (1) RCFC 37(a)(5)(C) is permissive and awarding fees would not promote judicial economy, (2) its privilege positions were substantially justified, and (3) an award would be unjust.
- The Court found procedural requirements for seeking fees satisfied, analyzed the substantial-justification exception, concluded the government’s positions were substantially justified given the genuine disputes over privilege application and the sufficiency of privilege descriptions, and denied the fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether attorney’s fees should be awarded under RCFC 37(a)(5)(C) after motion to compel was granted in part and denied in part | Fee award needed to compensate and deter; use lodestar × win‑ratio to apportion recovery for documents produced | Rule is discretionary; awarding fees would impede merits resolution, and the government’s privilege positions were substantially justified | Denied — no fees awarded under RCFC 37(a)(5)(C) |
| Whether the government’s privilege assertions were "substantially justified" | Many documents were not privileged and government’s descriptions were insufficient, so withholding was not substantially justified | The government had genuine, reasonable disputes and submitted declarations consistent with prior accepted practice | Government positions were substantially justified; substantial dispute existed over privilege application |
| Whether other circumstances make an award unjust | N/A (plaintiffs focused on compensation/deterrence) | Award would not promote judicial economy, could chill executive deliberations, and no misconduct justified sanctions | Court did not need to reach this because substantial justification exception controlled |
| Proper method to apportion fees when relief is partial | Lodestar calculation multiplied by percentage of documents prevailed on (win ratio) | Win‑ratio approach is inappropriate; apportionment should reflect whether invocation was substantially justified, and government would deserve offset for privileged documents | Court declined to adopt plaintiffs’ lodestar × win‑ratio method and did not award fees |
Key Cases Cited
- Pierce v. Underwood, 487 U.S. 552 (Sup. Ct.) (defines “substantially justified” standard)
- Cobell v. Norton, 213 F.R.D. 1 (D.D.C. 2003) (finding objections substantially justified where privilege issues were unresolved)
- Hyde & Drath v. Baker, 24 F.3d 1162 (9th Cir. 1994) (discussing circumstances that may make fee awards unjust)
- Confidential Informant 59-05071 v. United States, 121 Fed. Cl. 36 (Fed. Cl. 2015) (RCFC 37(a)(5)(C) discretionary; considerations for denying apportionment)
- Allgonac Mfg. Co. v. United States, 458 F.2d 1373 (Ct. Cl. 1972) (RCFC may be informed by Federal Rules interpretations)