Gate Guard Services L.P. v. Perez
14 F. Supp. 3d 825
S.D. Tex.2014Background
- Gate Guard Services, L.P. (GGS) provides gate attendants to oilfield operators; DOL investigated after complaints and demanded over $6 million in back wages, later reduced to about $2 million.
- DOL investigator Rapstine conducted a limited investigation (interviewed <17 of ~400 attendants), shredded interview notes, and issued a $6M demand without full procedural steps; DOL later filed an enforcement action while GGS filed a declaratory judgment action.
- The two suits were consolidated; after discovery and cross-motions, the Court granted summary judgment to GGS, dismissed DOL claims, and entered final judgment for GGS.
- GGS sought attorney’s fees under the EAJA initially under 28 U.S.C. § 2412(b) (bad faith) but was denied; Court invited refiling under § 2412(d) (substantial justification/net worth limits).
- GGS submitted evidence that (1) its net worth as of filing (Nov 19, 2010) was below $7,000,000 and it had <500 employees, and (2) incurred substantial attorney, paralegal, and travel costs challenging the DOL.
- The Court found the DOL was not substantially justified in its administrative and litigation positions and awarded EAJA fees (cost-of-living adjusted), paralegal fees, and travel expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GGS is a "prevailing party" under EAJA | GGS obtained complete relief (final judgment) and is prevailing | — | GGS is a prevailing party (undisputed) |
| Timeliness and EAJA §2412(d) eligibility (net worth & employee count) | Initial EAJA filing timely; supplied CPA-declaration, tax returns and compiled financials showing net worth <$7M and 37 employees | DOL: GGS used cash-basis accounting (not GAAP), unaudited statements, possible bias → evidence unreliable | Court accepted GGS’s evidence as sufficient; GGS meets §2412(d) party definition |
| Whether the DOL’s position was "substantially justified" | DOL’s pre-litigation investigation and litigation conduct were unreasonable (limited interviews, destroyed notes, deviated from procedures, ignored contrary evidence and precedent) | DOL: conducted extensive investigation; had exhibits and alternative authority; facts pointed both ways | Court: DOL was not substantially justified in administrative or litigation positions; EAJA relief warranted |
| Amount and components of EAJA award (rate, enhancements, other expenses) | Seek market/adjusted rates, COLA adjustments, paralegal fees, and travel expenses | DOL opposed market-rate enhancement and made only footnote objections to COLA; disputed some recoverable expenses | Court denied market-rate enhancement for specialized counsel; granted COLA-adjusted statutory rates, awarded $521,812.94 attorneys’ fees, $10,752 paralegal fees, and $82,962.67 travel (total $565,527.61) |
Key Cases Cited
- Sullivan v. Hudson, 490 U.S. 877 (1989) (EAJA legislative purpose described)
- Pierce v. Underwood, 487 U.S. 552 (1988) (government must show position was substantially justified)
- Scarborough v. Principi, 541 U.S. 401 (2004) (EAJA pleading/allegation rules; relation-back of fee applications)
- Hyatt v. Shalala, 6 F.3d 250 (4th Cir. 1993) (distinction between §2412(b) and §2412(d) fee calculations)
- Baker v. Bowen, 839 F.2d 1075 (5th Cir. 1988) (bad-faith exception and substantial-justification standard)
- Heavrin v. United States, 330 F.3d 723 (6th Cir. 2003) (EAJA net-worth evidence and GAAP discussion)
- Davidson v. Veneman, 317 F.3d 503 (5th Cir. 2003) (definition of "prevailing party" under EAJA)