ELR Citation: ELR 20070
No(s). 81 Civ. 3000 (S.D.N.Y. Jun 27, 1984)

The court rules that plaintiffs, who successfully challenged the National Environmental Policy Act (NEPA) compliance of federal and state approvals of the Westway highway project in New York City, are entitled to attorney fees under the common-law bad-faith exception to the American Rule. The court initially rules that the bad-faith exception applies when a plaintiff or defendant asserts claims, either before or during litigation, that are entirely without color or are put forward for improper reasons. To be without color a claim must be devoid of factual or legal support. The court holds that all defendants acted in bad faith before or during some phases of the instant litigation. Reviewing the history of the dispute, including two trials and an appeal, the court describes how defendants, the Corps of Engineers, Federal Highway Administration (FHwA), and New York State Department of Transportation (NYSDOT), violated NEPA by failing to supplement a 1977 FHwA environmental impact statement (EIS) in light of new information on the highway project's effects on fishery resources in the Hudson River. The Corps, which issued a permit for the Hudson River landfill on which part of the project would be built, and NYSDOT decided on several occasions prior to litigation to continue to rely on the 1977 EIS, despite new information contradicting a critical conclusion in that document. The EIS described the area to be filled as entirely devoid of valuable marine life; a subsequent study produced data in 1979 and results in 1980 indicating that the area is rich in striped bass and other valuable species. At trial the Corps did not even try to establish that it gave the issue reasoned consideration. The court rejects the argument that continued reliance on the EIS was not bad faith because the fisheries study concluded that damage to the fisheries habitat by the Westway project would not affect the overall fisheries productivity of the Hudson. The argument is legally groundless since NEPA requires supplementation of an EIS when new information is uncovered about significant immediate environmental impacts of a project. Moreover, the report's conclusion was unsupported in the study, and indeed was contradicted by those data in the study that were relevant. Finding the handling of the fisheries issue at the first trial by the Corps and NYSDOT to be without legal and factual support or proper purpose, the court holds that both acted in bad faith.

The court also finds that the FHwA and NYSDOT acted in bad faith before and during the second trial, which addressed NEPA violations in the agencies' failure to amend the original EIS, which they had written. Both agencies worked to obscure the findings of the fisheries study before the issue came up in litigation. While the second trial was necessitated by plaintiff's failure to include FHwA in the first, defendants were independently responsible for most of the cost of the second because they insisted on relitigating in detail claims about the adequacy of the 1977 EIS that had been shown to be without merit in the first trial. The defense presented was not only duplicative, but it was characterized by testimony of exceptionally little credibility. The court finds that defendants' repetition of the discredited defenses and extraordinary lack of credibility prove bad faith in the second trial. The court also finds bad faith in NYSDOT's appeal of the decisions. The state merely reiterated the baseless position on which it lost below.

In conclusion, the court rules that plaintiffs are entitled to attorney fees concerning the fisheries issue due to the bad faith of the Corps and NYSDOT in the first trial, the FHwA and NYSDOT before and during the second trial, and NYSDOT in the appeal.

The court next rules plaintiffs do not qualify for fees under the common-law theory of common benefit. Plaintiffs' action was to vindicate a general social grievance, and the theory only applies when the benefit it to a specific group.

The court also rejects plaintiffs' claim under the Equal Access to Justice Act (EAJA) for fees to a prevailing party in an action against the United States where the federal government's position was substantially unjustified. While this provision was repealed effective October 1, 1984, it remains in effect for actions commenced before that date, the court rules. However, EAJA defines those parties who may benefit from this provision as those whose net worth does not exceed $1,000,000. The court rules that since one plaintiff is wealthier than the cut-off figure, the EAJA claim is not available, even though that plaintiff is not one of those making the claim. The court also rules that the fee action against the state is not barred by the Eleventh Amendment. The sovereign immunity bar erected by that Amendment does not apply to injunctive actions, and is not activated if injunctive relief has an ancillary requirement that the state expend money, including for attorney fees. The court rejects NYSDOT's argument that the fees are a prohibited punitive damages award, finding the award more compensatory in nature.

The court awards fees of $261,205 and disbursements of $29,049 to plaintiffs for their work on the fisheries issue leading up to and during the two trials and the appeal. The court rules that the common-law bad-faith doctrine does not allow for application of a multiplier to the actual fee amounts and declines to award fees for work on the fee litigation itself. It holds NYSDOT liable for the entire amount and the Corps and FHwA liable for lesser amounts, reflecting the fact that their bad faith was limited to some of the proceedings.

[Earlier decisions in this case are reported at 12 ELR 20519, 12 ELR 20533, 12 ELR 20742, 13 ELR 20326, and 13 ELR 20347.]

Counsel for Plaintiffs
Albert K. Butzel, Mitchell S. Bernard
Butzel & Kass
45 Rockefeller Plaza, New York NY 10111
(212) 765-1800

Counsel for Defendants
Howard Wilson, Marc H. Rosenbaum, Ass't U.S. Attorneys
One St. Andrews Plaza, New York NY 10007
(212) 791-0055

Counsel for Defendant-Intervenor
Paul J. Curran, Thomas A. Smart, Kelley J. Newton
Kaye, Scholer, Fierman, Hays & Handler
425 Park Ave., New York NY 10022
(212) 407-8000