The U.S. Court of Appeals for the Federal Circuit issued a nonprecedential decision Tuesday in Kandel v. United States, vacating the Court of Federal Claims' denial of attorney fees and costs under the Equal Access to Justice Act and remanding for further consideration of the government's conduct.
The case involves five plaintiffs—Gerald K. Kandel, Robert E. Knopes, Federico A. Maura, Stanley A. Zuckerman, and Ronald M. Martinez—who brought a class action against the United States in the Court of Federal Claims. The underlying litigation dates back to 2006 and involves disputes under the Lump Sum Act, 5 U.S.C. § 5551(a).
Writing for a three-judge panel that included Circuit Judges Lourie and Reyna, Circuit Judge Bryson addressed two key issues raised on appeal: whether the Equal Access to Justice Act authorizes payment of class administrator fees and expenses in class actions, and whether the government's conduct both before and during litigation was substantially justified.
The Equal Access to Justice Act, codified at 28 U.S.C. § 2412, allows prevailing parties in litigation against the United States to recover attorney fees and costs when the government's position is not substantially justified. The statute serves to level the playing field between private parties and the federal government in litigation by ensuring that individuals and small businesses are not deterred from challenging unreasonable government action due to the costs of litigation.
The Federal Circuit found that the Court of Federal Claims failed to adequately address a crucial component of the substantial justification analysis. Specifically, the appeals court noted that the lower court did not expressly examine whether the government's pre-suit conduct was substantially justified, focusing instead on the government's litigation conduct.
This distinction is important under EAJA jurisprudence because courts must evaluate both the government's pre-litigation actions that gave rise to the lawsuit and the government's position during the actual litigation. A finding that either the underlying government action or the litigation position lacked substantial justification can support an EAJA fee award.
"Because the Claims Court did not expressly address the issue of whether the government's pre-suit conduct was substantially justified, we vacate the court's order and direct that it address that issue," the court wrote. The panel indicated that if the lower court finds the government's pre-suit conduct was not substantially justified, it would then need to address the separate question of whether EAJA permits recovery of class administrator fees and expenses.
The case represents part of a long-running legal dispute that has spanned nearly two decades. The original case was filed in 2006 in the Court of Federal Claims under case number 1:06-cv-00872-DAT, with Judge David A. Tapp presiding. The current appeal was docketed as case 24-2193 in the Federal Circuit.
The plaintiffs were represented by Roger J. Marzulla and Nancie Gail Marzulla of Marzulla Law, LLC in Washington, D.C. The government's defense was handled by attorneys from the Commercial Litigation Branch of the Civil Division at the Department of Justice, including Blake William Cowman, who argued the case, along with Reginald Thomas Blades Jr., Patricia M. McCarthy, and Brett Shumate.
Class actions against the government present unique challenges for fee recovery under EAJA, particularly regarding administrative costs that may be necessary to manage large groups of plaintiffs. The question of whether class administrator fees fall within EAJA's scope affects how such cases are structured and whether they remain economically viable for plaintiff attorneys.
The Lump Sum Act, which appears to be central to the underlying dispute, governs certain payments to federal employees and retirees. While the specific nature of the plaintiffs' claims under this statute is not detailed in the available portion of the opinion, such cases often involve disputes over benefit calculations, payment timing, or eligibility determinations.
The Federal Circuit's decision to remand rather than rule definitively on either issue suggests the court wants a complete record before making determinations that could affect future EAJA litigation. The substantial justification standard requires courts to examine whether the government's position had a reasonable basis both in law and fact, considering the totality of circumstances.
The nonprecedential nature of the decision means it cannot be cited as binding authority in future cases, though it may provide guidance for similar disputes. This designation is common for Federal Circuit decisions that resolve case-specific issues without establishing broader legal principles.
On remand, the Court of Federal Claims will need to conduct a thorough analysis of the government's pre-litigation conduct to determine whether it meets the substantial justification standard. If the court finds against the government on this issue, it will then address the novel question of class administrator fee recovery under EAJA, potentially providing important guidance for future class actions against the federal government.
The case highlights the ongoing importance of the Equal Access to Justice Act in ensuring that individuals can effectively challenge government actions without being deterred by litigation costs, while also illustrating the complex procedural and substantive issues that arise when applying EAJA to class action litigation.