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February 11, 1982


The opinion of the court was delivered by: Shadur, District Judge.


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 action:

  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 [1980] 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:

  The United States would also be liable under the
  same standards which govern awards against other
  parties under Federal statutory exceptions,
  unless the statute expressly provides otherwise.

  subsection clarifies the liability of the United
  States under such statutes as the Civil Rights
  Attorney's Fees Awards Act of 1976, as well.

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 possible readings:

    (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 ...

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