On Petition for Review of Application of Washington Urban League for Award of Attorney's Fees and Expenses. (FERC No. C164-26).
Aldisert, Chief Judge, Gibbons and Higginbotham, Circuit Judges.
HIGGINBOTHAM, A. LEON, JR., Circuit Judge.
This case involves petitioner Washington Urban League's ("WUL") request for attorneys' fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d)(1)(A) (1982).
Under subsection 2412(d)(1)(A) of the EAJA, a court shall award attorneys' fees to a prevailing party "unless the court 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). The Federal Energy Regulatory Commission ("FERC" or "Commission") argues that WUL cannot recover attorneys' fees because the Commission's position was substantially justified*fn1 and that an award of attorneys' fees to WUL would be unjust. After a careful review of the record in this case and the applicable legal standards, we will grant WUL's request for attorneys' fees. We will, however, reduce WUL's application for attorneys' fees because WUL prevailed only on one of its three challenges to the FERC. This award will be limited to those fees incurred in addressing the issue on which it prevailed. We are simply not satisfied that the Commission's position was substantially justified, and we do not find the award of attorneys' fees to be unjust on that issue.
In the instant case this court found that the FERC erred as a matter of law in interpreting force majeure in a warranty contract to include foreseeable and anticipated events. Furthermore, this court held that the Commission's findings were not supported by substantial evidence in Gulf Oil Corp. v. FERC, 706 F.2d 444, 452-55 (3d Cir. 1983), cert. denied, 464 U.S. 1038, 104 S. Ct. 698, 79 L. Ed. 2d 164 (1984). Gulf had not established substantial evidence that it tried to overcome the results of the force majeure event by doing everything within its control to prevent or minimize the event's occurrence and its effects. Nor had Gulf proven that a force majeure event caused the accidents, altercations, repairs or failure of production. Consequently, this court remanded the force majeure issue to the Commission for further proceedings.
In disputing WUL's petition for attorneys' fees, FERC argues that in deciding whether its position was substantially justified we should look to Rule 37 of the Federal Rules of Civil Procedure. Rule 37 considers a party's action "substantially justified" except where "no genuine dispute exists." Because Congress incorporated the "substantially justified" language from Rule 37 into the EAJA, FERC argues that "attorneys' fees should not be awarded unless the government position is found to be indefensible or the government has defended such a situation in which no genuine dispute exists." Response of the FERC in Opposition to Petitioner's Motion for Attorneys' Fees at 10. This illogical syllogism is exactly the same as the one this court rejected in NRDC v. EPA, 703 F.2d 700 (3d Cir. 1983).
In that case this court explained:
The substantial justification language may have been borrowed from one of the Federal Rules of Civil Procedure, but that premise lends no support for the illogical syllogism the EPA erects from it. . . . The EPA would rewrite the Act . . . to give it a meaning that even the Justice Department [whose proposed limiting amendments were rejected] never sought.
In our view, the Committee reports from the House and the Senate set forth the correct standard as follows:
The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable ...