Hawkins Parnell Urges U.S. Supreme Court to Reverse Ninth Circuit in Equal Access to Justice Act Case
September 26, 2024 (Washington, D.C.) – Hawkins Parnell & Young and McDermott Will & Emery replied to the opposition filed by the U.S. Department of Labor and the U.S. Department of Justice to a petition for a writ of certiorari previously filed in the U.S. Supreme Court concerning the recovery of attorneys' fees and costs from the U.S. government under the Equal Access to Justice Act (EAJA) in Bowers + Kubota Consulting, Inc., et al. v. Julie A. Su, Acting Secretary of Labor of the U.S. Department of Labor.
David Johanson, senior partner and chair of Hawkins Parnell's Employee Benefits, ERISA, and ESOP practice and partner-in-charge of the Napa office, remarked, "If attorneys' and other fees are not permitted in this case, it is hard to imagine a case in which EAJA will allow them."
Hawkins Parnell sought to recover attorneys' fees and defense costs in the U.S. Court of Appeals for the Ninth Circuit after winning a landmark ESOP trial in the summer of 2021 in the U.S. District Court for the District of Hawai'i. The underlying ERISA litigation that Hawkins Parnell defended against the U.S. Department of Labor and the Employee Benefits Security Administration followed a four-year investigation of the architectural firm and its founding shareholders after a $40 million stock sale to an employee stock ownership plan and trust. Although the Ninth Circuit was critical of the government as "shoddy" for basing their case on one expert's erroneous valuation, it refused to reverse the denial of attorneys’ fees in the district court.
The petition asks the U.S. Supreme Court to clarify widespread disagreement among the courts of appeal over how to interpret and apply EAJA's "substantially justified" standard. As Judge Collins explained in dissent in the Ninth Circuit, the holding below rewrites the standard for EAJA attorneys’ fees: It “allow[s] the Government to defeat a fee request based on its failure to subjectively appreciate that its case was not supported by substantial evidence.” The petition argues that the alternative approach that the Ninth Circuit decided upon will permit government abuse, enabling cases to proceed to trial without reliable evidence.
As the amicus brief in support of the petition filed by the ESOP Association argued, discouraging meritless enforcement actions is essential to achieving Congress’s aim under ERISA of encouraging ESOP formations. The American Society of Appraisers also filed an amicus brief in support of the petition to grant certiorari.
Hawkins Parnell’s team is led by David Johanson and Rachel Markun of the Napa, CA office and Douglas Rubel in Raleigh, NC. Michael Kimberly of McDermott Will & Emery is the counsel of record in the Supreme Court proceeding.
About Hawkins Parnell & Young
Hawkins Parnell & Young is a national defense litigation firm that has represented many of the largest and most well-known companies in high-risk litigation and business disputes. The 250-strong litigation team works with clients to develop winning defense strategies and, if necessary, try cases to verdict in all 50 states.