Nat'l Venture Capital Ass'n v. Nielson

318 F.Supp.3d 145

NATIONAL VENTURE CAPITAL ASSOCIATION, et al., Plaintiffs,

v.Kirstjen M. NIELSON, Secretary, U.S. Department of Homeland Security, et al., Defendants.

Civil Action No. 17-1912 (JEB)

United States District Court, District of Columbia.

Signed July 13, 2018

Melissa E. Crow, North Potomac, MD, Paul Whitfield Hughes, III, Andrew John Pincus, Mayer Brown PLLC, John T. Lewis, Leslie Karen Dellon, Washington, DC, for Plaintiffs.

Aaron S. Goldsmith, Glenn M. Girdharry, P. Angel Martinez, U.S. Department of Justice, Office of Immigration Litigation, Washington, DC, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District JudgeThis case involves the Department of Homeland Security's decision to delay implementing an Obama-era immigration rule, the International Entrepreneur Rule, 82 Fed. Reg. 5,238 (Jan. 17, 2017). The Rule would have allowed certain foreign entrepreneurs to obtain immigration "parole"—that is, to temporarily enter the United States despite lacking a visa or green card. It was finalized in the waning hours of the Obama administration and was set to take effect 180 days later—on July 17, 2017. On the eve of that date, however, the Department issued a new rule ("the Delay Rule") delaying the effective date for another eight months, until March 14, 2018.

Plaintiffs brought suit last September, alleging that the agency had violated the Administrative Procedure Act in promulgating the later rule. This Court agreed and granted summary judgment in their favor, vacating the Delay Rule in the process. Plaintiffs' counsel now move for an award of attorney fees pursuant to the Equal Access to Justice Act (EAJA), which "directs a court to award 'fees and other expenses' to private parties who prevail in [certain types of] litigation against the United States if, among other conditions, the position of the United States was not 'substantially justified.' " Commissioner, INS v. Jean, 496 U.S. 154, 155, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990) (quoting 28 U.S.C. § 2412(d)(1)(A) ). Although there is no dispute that Plaintiffs have prevailed here, both sides contest whether the Government's position was substantially justified. Defendants also decry the amount of fees sought. Finding that Plaintiffs have the better of both arguments, the Court will grant their Motion and award them $102,316.67.

I. Background

The Court previously provided a detailed factual background of the "two competing rules" in this case: (1) the International Entrepreneur Rule (IE Final Rule) and (2) the Delay Rule. See Nat'l Venture Capital Ass'n v. Duke, 291 F.Supp.3d 5, 9-10 (D.D.C. 2017). For now, it suffices to briefly outline the suit's procedural history.

Plaintiffs include two foreign nationals (Atma and Anand Krishna), two U.S. businesses (Omni Labs and Occasion), and the National Venture Capital Association (NVCA). Two months after the Delay Rule's issuance, they brought this suit seeking to invalidate it, see Compl., ¶ 11, and moved for a preliminary injunction ten days later. See ECF No. 12. The Court heard oral arguments on the Motion on October 20, 2017, and, after discussion with the parties, decided that the case could be resolved expeditiously on summary judgment. See Minute Order of October 25, 2017. Following an expedited round of briefing, the Court granted judgment in Plaintiffs' favor. See NVCA, 291 F.Supp.3d at 21. Consistent with that decision, it also vacated the Delay Rule.

At all times, Plaintiffs were represented by the law firm of Mayer Brown, LLC, including principally one partner, Paul Hughes, and one associate, John Lewis. See ECF No. 31-6 (Declaration of Paul Hughes), ¶¶ 1-3, 11. They also enlisted two attorneys from the American Immigration Council—Melissa Crow and Leslie Dellon—for their expertise in immigration laws. Id., ¶ 9. With the litigation largely wrapped up, the parties have filed dueling briefs on attorney fees, which are now ripe for review.

II. Legal Standard

Under the "American Rule," each party ordinarily bears its own attorney fees unless there is express statutory authorization to the contrary. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 245, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). One such statute is the EAJA, which "renders the United States liable for attorney's fees for which it would not otherwise be liable, and thus amounts to a partial waiver of sovereign immunity." Ardestani v. INS, 502 U.S. 129, 137, 112 S.Ct. 515, 116 L.Ed.2d 496 (1991) (citations omitted).

Pursuant to those provisions, the Court must award attorney fees to a "prevailing party" in an action against the United States "unless [it] finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). To qualify as a prevailing party, a plaintiff must achieve "a resolution of the dispute which changes the legal relationship between" the parties. Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989). An individual is eligible for an EAJA award, furthermore, only if her "net worth did not exceed $2,000,000 at the time the civil action was filed." 28 U.S.C. § 2412(d)(2)(B). Likewise, a corporation (such as NVCA) must have a net worth below $7,000,000 and fewer than 500 employees. Id. The motion for an EAJA award, with an accompanying itemized statement of time expended and billing rates, must be filed "within thirty days of final judgment in the action." Id. § 2412(d)(1)(B).

III. Analysis

The Government, wisely, does not contest that Plaintiffs were the prevailing parties in this case. After all, the Court awarded them complete relief, vacating the challenged Delay Rule in the process. Nor do Defendants dispute that Plaintiffs are financially eligible to receive an EAJA award. The Court, too, agrees that each Plaintiff has provided sufficient documentation in that respect. See ECF Nos. 31-1 (Declaration of Bobby Franklin); 31-2 (Declaration of Atma Krishna); 31-3 (Declaration of Anand Krishna); 31-4 (Declaration of Alex Modon); 31-5 (Declaration of Aksh Gupta).

The Government instead maintains that its actions were substantially justified, thereby precluding any award. Alternatively, it argues that the fees requested by Plaintiffs are unreasonable and asks the Court to reduce any award accordingly. The Court takes each position in turn.

A. Substantial Justification

"Once an applicant's status as a prevailing party is established, the government has the burden of showing that its legal position was substantially justified or that special circumstances make an award unjust." Taucher v. Brown-Hruska, 396 F.3d 1168, 1173 (D.C. Cir. 2005) (citation omitted). "The government's position is substantially justified if it is 'justified to a degree that could satisfy a reasonable person' or, in other words, has 'a reasonable basis both in law and fact.' " Id. (quoting Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) ). The agency must show "both" that (1) the "underlying agency action" and (2) "the arguments defending that action in court" satisfy that standard. See Halverson v. Slater, 206 F.3d 1205, 1208 (D.C. Cir. 2000) (emphasis added).

The Court begins with the "underlying agency action": the Delay Rule. Defendants promulgated that Rule without adhering to the APA's most basic requirements: that they provide "[g]eneral notice of [its] proposed rule making" in the Federal Register, as well as "an opportunity" for the public to comment before promulgating a rule. See 5 U.S.C. § 553(b), (c).

While an agency may waive those prerequisites for "good cause," the D.C. Circuit has repeatedly warned that the "the good cause exception" to the APA's notice-and-comment rule "is to be narrowly construed and only reluctantly countenanced." Mack Trucks, Inc. v. EPA, 682 F.3d 87, 93 (D.C. Cir. 2012) (quoting Util. Solid Waste Activities Grp. v. EPA, 236 F.3d 749, 754 (D.C. Cir. 2001) ). The APA "excuses notice and comment," it has stressed, only in "emergency situations, or where delay could result in serious harm." Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004) (citations omitted).

What was the "emergency" justifying the Delay Rule here? In a total of three paragraphs in the Federal Register, DHS offered two rationales for invoking the good-cause exception: (1) expense to the agency; and (2) potential confusion if the IE Final Rule were to take effect. See 82 Fed. Reg. at 31,888. Neither position "substantially justified" jettisoning the APA's notice-and-comment requirements.

First, "the expense of implementing the new parole system." NVCA, 291 F.Supp.3d at 17. The Court dismissed that concern, and although "the government can lose on the merits and nevertheless be found to have taken a substantially justified position," Taucher, 396 F.3d at 1173, this was not a close call. First, Defendants cited no cases (and still have marshaled none) for the proposition that an agency can invoke the good-cause exception simply to protect its own bottom line. See NVCA, 291 F.Supp.3d at 17. Even assuming it could, the Court of Appeals has reserved only the "possibility that a fiscal calamity could conceivably justify bypassing the notice-and-comment requirement." Sorenson Comm'ns Inc. v. FCC, 755 F.3d 702, 707 (D.C. Cir. 2014) (emphasis added). Far from establishing "fiscal peril," DHS made no "factual findings supporting the reality of the threat." Id. at 706. Indeed, it had previously found that the rule would not"generate additional processing costs to the government to process applications." 82 Fed. Reg. at 5,274. The agency thus lacked a "reasonable basis in law and fact" to skip notice and comment on that basis.

Nor does its justification fare better in hindsight. During litigation, DHS pitched the IE Final Rule as an "extraordinary change," which would require significant resources to implement. See NVCA, 291 F.Supp.3d at 18. The Court was...