ELR Citation: ELR 21039
No(s). s. 84-6287 et al (2d Cir. Oct 28, 1985)

The court holds that plaintiffs may claim attorney fees from the state of New York under the bad-faith exception to the American rule and from the federal defendants under the Equal Access to Justice Act (EAJA). The court first holds that the state is not immune from fee awards. The Eleventh Amendment does not bar an award since the award is ancillary to the central relief granted. Also, the rule against allowing punitive damages against the state does not bar an award under the bad-faith exception, since the award is basically compensatory. The court rules that fees may be awarded under the bad-faith exception where a party's claims were both meritless and made for improper purposes. An award must be affirmed unless the finding of bad faith was clearly erroneous or the award was an abuse of equitable discretion. The district court's finding that the claims had no merit was not clearly erroneous, but its finding that the Corps of Engineers acted for an improper purpose was conclusory and must be reversed. In contrast, the finding on the state's bad faith was well-supported. The district court should have awarded fees for actions before itself only; it has no common-law power to rule on the availablity of fees for appeals. But since plaintiffs did not ask the appellate court for fees at the time of appeal, they are foreclosed from receiving fees now. The court next holds that the trial court made three errors in calculating the fee award. It failed to determine whether the rates requested were comparable with those charged for similar work by those of similar skill in the area. It also failed to consider whether the amount of hours spent was reasonable. Lastly, the trial court failed to explain its decision to award two-thirds of the cost incurred on one appeal. The court did not err by allowing fees despite the lack of contemporaneous time records, since such records are only required for work done after the Second Circuit announced the requirement in a recent case.

Finally, the court holds that plaintiffs are eligible for some fees under EAJA. All conditions for an EAJA award are satisfied, except that one of the nonapplicant plaintiffs has a net worth that disqualifies him for fees. The majority holds that the district court should have awarded fees, reduced based on the ratio of eligible plaintiffs to total plaintiffs. A dissent would have affirmed the district court's conclusion that when one ineligible party sues, other parties may not collect fees.

[The lower court opinion appears at 15 ELR 20070. Related cases appear at 12 ELR 20519, 12 ELR 20533, 12 ELR 20742, 13 ELR 20326, and 13 ELR 20347.]

Counsel are listed at 15 ELR 20070.