Sufi Network Services, Inc. v. United States
128 Fed. Cl. 683
| Fed. Cl. | 2016Background
- SUFI contracted with the Air Force in 1996 to provide exclusive long-distance phone services at U.S. Air Force lodging in Germany; the Air Force materially and willfully breached the contract.
- SUFI pursued administrative claims before the ASBCA (multiple decisions and three motions for reconsideration), then appealed to the Court of Federal Claims and later to the Federal Circuit; after remand the ASBCA awarded SUFI roughly $113.25 million.
- Litigation spanned more than a decade (counsel began work in 2004); SUFI seeks recovery of attorneys’ fees and expenses incurred before the ASBCA, the Court of Federal Claims, and the Federal Circuit.
- SUFI requested fees under 28 U.S.C. § 2412(b) (bad-faith/common-law basis) or, alternatively, § 2412(d) (EAJA for small businesses), and sought full current law-firm rates plus interest.
- The Government opposed liability, the inclusion of ASBCA and appellate hours, recovery at current rates (arguing limits/interest prohibition), and the applicability of EAJA special-factor exceptions.
- The Court (bifurcating quantum) held SUFI is entitled to recover fees and expenses under § 2412(b) and alternatively § 2412(d), at full current rates, including ASBCA and appellate hours, and that interest on the fee award accrues from the filing date of the fee application.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Court may award § 2412 fees for work before the Federal Circuit and the Court of Federal Claims | Trial court may award appellate fees in the first instance; awarding everything in one forum avoids piecemeal litigation | Federal Circuit should decide appellate EAJA fees; separate applications required | Court may award fees for hours incurred before this Court and the Federal Circuit (trial court decides appellate fees initially) |
| Whether fees for work before the ASBCA are recoverable under § 2412 | Fees for administrative board work are recoverable where board proceedings are integral to the civil action or useful to judicial review, and Congress intended EAJA to cover board cases | § 2412 does not authorize recovery for ASBCA hours here; boards lack authority to award appellate-related fees | ASBCA hours are recoverable because board proceedings were integral to judicial review and remand, consistent with Supreme Court and Federal Circuit precedent |
| Whether SUFI may recover under § 2412(b) (bad-faith/common-law ground) | Government and Air Force acted in bad faith (pre-litigation breach, spoliation, Board partial errors favoring government, DOJ appeals despite binding precedent) | Government denies bad faith and limits bad-faith inquiry to post-Board conduct | Court finds pervasive bad faith and awards fees under § 2412(b) |
| Whether SUFI may recover under § 2412(d) (EAJA) because Government position was not substantially justified | Government’s positions (pre-litigation acts, Board errors, DOJ appeals of Board decision) lacked a reasonable basis in law and fact; SUFI satisfies small-business eligibility | Government contends its litigation positions were substantially justified on many issues and points to partial successes | Court finds Government’s overall position not substantially justified; SUFI entitled to EAJA fees alternatively |
| Whether fees should be awarded at full, current law-firm rates (vs. historical or EAJA $125 cap) | Delay, exceptional results, special tasks, and limited availability of qualified counsel justify upward adjustments and current rates under § 2412(b) and as EAJA special factors under § 2412(d) | Increases would function as interest (disallowed); EAJA cap applies except for narrow Pierce special-factor exception; government-contract expertise not per se qualifying | Court awards full current rates: under § 2412(b) delay adjustment is appropriate; under § 2412(d) several special factors (exceptional results, extraordinary delay, limited availability of qualified counsel on these facts) justify exceeding $125 cap |
| When interest on the fee judgment begins to accrue | Interest accrues from date of filing fee application under PSA term cited | No recovery of interest argued or it would be inconsistent with anti-interest precedent | Court holds interest on the § 2412 award accrues from the filing date of SUFI’s application (June 17, 2016) |
Key Cases Cited
- Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S. 240 (1975) (common-law standard for fee awards against losing parties)
- F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116 (1974) (bad-faith basis for fee-shifting under common law)
- Perkins v. Standard Oil Co. of Cal., 399 U.S. 222 (1970) (district court should fix appellate fee awards in first instance)
- Melkonyan v. Sullivan, 501 U.S. 89 (1991) (EAJA fees recoverable for administrative remand work when court retains jurisdiction)
- Sullivan v. Hudson, 490 U.S. 877 (1989) (administrative proceedings may be integral part of the civil action for fee awards)
- Webb v. Tidelands Auto. Club, Inc., 471 U.S. 234 (1985) (work before administrative body is recoverable when useful to court litigation)
- Pierce v. Underwood, 487 U.S. 552 (1988) (EAJA substantial-justification standard; special-factor explanation)
- Jean v. Nelson, 496 U.S. 154 (1990) (overall conduct, not atomized items, informs substantial-justification inquiry)
- Library of Congress v. Shaw, 478 U.S. 310 (1986) (addressing whether rate adjustments are equivalent to interest)
- Missouri v. Jenkins, 491 U.S. 274 (1989) (supports adjustment for delay in fee awards under fee-shifting statutes)
- Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010) (extraordinary results can justify fee adjustments)
- Fidelity Constr. Co. v. United States, 700 F.2d 1379 (Fed. Cir. 1983) (trial court may award fees for services before a board when it also awards fees for services before itself)
- Centex Corp. v. United States, 486 F.3d 1369 (2007) (limitations on fee-shifting for pre-accrual government conduct)
- Chui v. United States, 948 F.2d 711 (1991) (historical vs. current rate discussion for § 2412(b))
- Hubbard v. United States, 480 F.3d 1327 (2007) (EAJA adjustments and overall success considerations)