The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
On October 13, 1981 this Court rendered its memorandum
opinion and order (the "Opinion," 526 F. Supp. 460) in these
three consolidated actions involving allegedly pornographic
materials seized in 1980 by the United States Customs Service.
After the government had reported on its compliance with
Section 2 of the Opinion*fn1 the Court entered final judgment
in the three actions. On November 16, 1981 YourStyle moved
under 28 U.S.C. § 2412 ("Section 2412") for an award of
attorneys' fees and expenses in addition to costs.*fn2 For the
reasons stated in this memorandum opinion and order YourStyle's
motion could be granted only in part if at all, but further
briefing by the parties is required in any event.
YourStyle invokes each of two subsections of Section 2412
permitting attorneys' fee awards to the "prevailing party" in
any litigation with the government. Section 2412(b) provides:
Section 2412(d)(1)(A) provides for an award in any non-tort
unless the court finds that the position of the
United States was substantially justified or that
special circumstances make an award unjust.
Because the latter provision poses the somewhat easier legal
problems it will be dealt with first in this opinion.
Under Section 2412(d) the Court must first determine that
the government's adversary is the "prevailing party." Then
fees are to be awarded unless the limiting language quoted in
the preceding paragraph of this opinion applies. YourStyle
cannot succeed on the latter ground.
Analysis of the Opinion discloses that YourStyle could be
found the "prevailing party" only in the limited sense
discussed later in this opinion. But in any case the Court
cannot find in good conscience that the other statutory
condition has been satisfied. As H.R.Rep.No.96-1418, reprinted
in  U.S.Code Cong. & Ad. News 4984, 4989, 4990
(hereafter cited "Report at 2989, 4990") put it:
Where the Government can show that its case had a
reasonable basis both in law and fact, no award
will be made. . . . The standard, however, should
not be read to raise a presumption that the
Government position was not substantially
justified, simply because it lost the case. Nor,
in fact, does the standard require the Government
to establish that its decision to litigate was
based on a substantial probability of prevailing.
Furthermore, the Government should not be held
liable where "special circumstances would make an
award unjust." This "safety valve" helps to
insure that the Government is not deterred from
advancing in good faith the novel but credible
extensions and interpretations of the law that
often underlie vigorous enforcement efforts. It
also gives the court discretion to deny awards
where equitable considerations dictate an award
should not be made.
Again a reading of the Opinion makes plain that the United
States has met the test that insulates it from liability for
fees. Its position in the litigation was certainly
"substantially justified."*fn3 Section 2412(d) thus brings
YourStyle to a dead end.
As for Section 2412(b), its opaque language has led the
parties to opposite conclusions. In part it was intended to
apply the "American Rule" — with its limited exceptions — to
the federal government as a losing litigant. Report at 4987,
4996. In that respect neither the "bad faith" or any other
recognized exception to the American Rule can even arguably
apply here.*fn4 According to the United States that should be
the end of the matter.
However the government's construction of the new enactment
as embracing only the "American Rule" (a common-law rule)
would effectively read critical language out of the statute.
Section 2412(b) also makes the government liable where another
party would be liable "under the terms of any statute which
specifically provides for such an award." On that score Report
at 4996 reads:
After pointing to that legislative history YourStyle is
guilty of just as simplistic an approach as the government. It
argues (R. Br. 4):
If fees cannot be covered under Section 1988
[42 U.S.C. § 1988, the Civil Rights Attorney's Fees
Awards Act of 1976] in this case, it is hard to
tell what sort of "clarification" has occurred.
But the issue is not that easy. Section 1988 provides a
discretionary allowance of fees to a prevailing party under a
number of statutes, including relevantly Sections 1981 to 1986
(except for 1984) of Title 42. If we indulge the effective
incorporation concept that seems to be implicit in Section
2412(b), the United States might readily be a losing defendant
in actions that partook of the nature of Section 1981, 1982,
1985 or 1986 and thereby be subject to assessment of fees
under Section 2412(b). Section 1983 however poses a more
difficult question of construction. For the government to fit
within Section 2412(b) in a Section 1983 action there are two
(1) Does the United States (like any other
"person" who is a defendant in such an action)
have to be shown to have violated a plaintiff's
rights "under color" of state law? That could
occur, for instance, if its activities were
intertwined with those of actual state actors in
a way exemplified by Burton v. Wilmington Parking
Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45
(1961) or ...