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12/02/86 Federal Election v. Congressman Charles G.

December 2, 1986




Before: EDWARDS, RUTH B. GINSBURG and STARR, Circuit Judges.



Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge: In this interlocutory appeal, the Federal Election Commission challenges the District Court's determination that the Commission is liable to Congressman Charles G. Rose under the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(1982 & Supp. III 1985), for litigation costs and attorney's fees incurred in a suit to compel agency action. The suit was brought to require action on the Congressman's administrative complaint charging violations of the Federal Election Campaign Act. We conclude that, under the standards governing EAJA fee awards, the District Court erred in holding that the FEC's position in this case was not "substantially justified." I

Congressman Rose represents the Seventh Congressional District of North Carolina. The Congressman filed an administrative complaint with the FEC on October 29, 1982, just days before the November 1982 elections in which he successfully sought re-election. The complaint named several respondents and attributed to them various violations of the Federal Election Campaign Act (the "Campaign Act"), 2 U.S.C. §§ 431-455 (1982 & Supp. III 1985). Congressman Rose charged, among other things, that Jefferson Marketing, Inc. had violated the Campaign Act by making certain political contributions during the 1982 Congressional campaign and that, because JMI was merely an extension of the National Congressional Club , the NCC had likewise violated the Campaign Act by failing to report these contributions.

As required by the Campaign Act, the Commission notified JMI and NCC of the Congressman's complaint and gave the two respondents an opportunity to explain why the FEC should take no action. See 2 U.S.C. § 437g(a)(1), (a)(2). *fn1 Respondents submitted their replies in December 1982, which was, of course, after the mid-term elections of the previous month. In April 1983, the Office of General Counsel recommended to the Commission that it find "reason to believe," see supra note 1, that respondents had violated the Campaign Act. In May 1983, the Commission did so. See 2 U.S.C. § 437g(a)(2).

The Commission then instituted an investigation destined to last from May 1983 through August 1984. Respondents resisted the investigation, impelling the Commission in February 1984 to file suit in federal district court in North Carolina to enforce its subpoenas. On August 22, 1984, the General Counsel recommended to the Commission that it find "probable cause to believe" that respondents had violated the Campaign Act. See supra note 1. Respondents replied to this recommendation on September 21, 1984.On October 9, 1984 the General Counsel's Office renewed its recommendation that probable cause be found. The Commission made this finding on October 30, 1984 and, as directed by the Campaign Act, undertook conciliation efforts. See id. § 437g(a)(4). These efforts were generally successful, culminating in conciliation agreements with all respondents except JMI and NCC. Soon after the 90-day maximum period for conciliation efforts expired, see id. 437g(a)(4)(i), the Commission filed suit in the Eastern District of North Carolina alleging violations of the Campaign Act by JMI and NCC. FEC v. National Congressional Club, No. 0424-Civ.-5 (E.D.N.C. filed Feb. 7, 1985); see 2 U.S.C. § 437g(a)(6).

Dissatisfied with the progress of the FEC's investigation, Congressman Rose in June 1983 filed suit against the Commission in the United States District Court for the District of Columbia. Rep. Rose alleged that the FEC's failure to take final action on his complaint violated the Campaign Act. Rose v. FEC, No. 83-1687 (D.D.C. filed June 13, 1983), Joint Appendix at 32. Eight months later, however, Mr. Rose reversed his decision to litigate. On February 16, 1984, the day after the Commission filed suit in federal district court in North Carolina, the Congressman voluntarily dismissed his suit here in Washington without prejudice. This lull in the litigation storm proved only temporary, however, as Mr. Rose filed another suit, in July 1984, advancing the same contentions against the Commission. Rose v. FEC, No. 84-2278 (D.D.C. filed July 24, 1984), J.A. at 16.

In his second action to compel agency action (filed, as noted above, in July 1984), Rep. Rose moved for summary judgment in September 1984, advancing two arguments to buttress his claim that the FEC's delay in investigating his complaint violated the Campaign Act. He argued, first, that the statute requires the Commission to take final action on an administrative complaint within 120 days of filing, 2 U.S.C. 437g(a)(8). *fn2 In the alternative, the Congressman argued that the Campaign Act requires the FEC to take final action within a reasonable time, which means, for complaints filed near the beginning of an election cycle, before the end of that election cycle (November 1984, in this case). *fn3 Vigorously contesting both positions, the Commission argued that the 120-day period set forth in the statute merely specifies how long a complainant must wait before filing a complaint. See supra note 2. The FEC further argued that the Campaign Act neither expressly nor impliedly requires final action within an election cycle. Instead, the FEC maintained, the court shall decide whether the Commission's delay was "contrary to law" within the meaning of the statute, 2 U.S.C. 437g(a)(8), by applying the general principles of administrative law developed to determine whether agency action is "arbitrary" or "capricious" or otherwise violative of the Administrative Procedure Act, 5 U.S.C. § 706 (1982). *fn4

The District Court granted summary judgment in favor of Mr. Rose on October 4, 1984, and ordered the Commission to determine within 15 days whether there was probable cause to believe that respondents had violated the Campaign Act, or show cause why it could not do so. Rose v. FEC, No. 84-2278 (D.D.C. Order dated Oct. 4, 1984), J.A. at 52. The court's disposition was premised on its conclusion that the Campaign Act contains a presumption that the Commission acts "contrary to law" unless it takes final action on complaints within an election cycle. *fn5

The Commission promptly appealed to this court, seeking summary reversal of this decision on two grounds: first, that the District Court's interpretation of the Campaign Act to require Commission resolution of complaints within an election cycle was without foundation in law; and, second, that the 15-day order contravened the clear and unambiguous language of the statute, § 437g(a)(8), which permits a court to order the Commission to act within 30 days. See supra note 2. We agreed with both arguments, summarily reversed the judgment on both grounds, and remanded the case. We concluded that in determining whether the Commission's treatment of a complaint is "contrary to law" within the meaning of § 437g(a)(8), the court should apply the factors set forth in Common Cause v. FEC, 489 F. Supp. 738, 744 (D.D.C. 1980), and Telecommunications Research & Action Center v. FCC , 242 U.S. App. D.C. 222, 750 F.2d 70, 80 (D.C. Cir. 1984), a decision handed down on the same day as our summary reversal. *fn6 See Rose v. FEC, No. 84-2278 (D.C. Cir. Order dated Oct. 24, 1984), J.A. at 90.

On remand, Congressman Rose again sought summary judgment. He argued that the Campaign Act obligated the Commission to act expeditiously; in Rep. Rose's view, the Commission's failure to resolve his administrative complaint within two years and its inadequate justification for this delay violated this obligation. *fn7 The Commission renewed its argument, with which this court had agreed, that its conduct was to be analyzed under the deferential standards elaborated in Common Cause and TRAC. See supra note 6. To support the reasonableness of its conduct, the Commission cited, as before, the novelty and complexity of the issues raised by Mr. Rose's complaint, the respondents' firm resistance to the Commission's investigation, and the largeworkload attendant to the 1984 Presidential election. Finally, it argued that TRAC required the court to decline review altogether, since the Commission was then proceeding promptly toward resolution of Rep. Rose's complaint.*fn8 See TRAC, 750 F.2d at 80.

Reviewing the Commission's conduct under the criteria of Common Cause and TRAC, the District Court again granted summary judgment in favor of Congressman Rose. See Rose v. FEC, No. 84-2278 (D.D.C. Memorandum & Order dated Oct. 30, 1984), J.A. at 111, 117. Under the first TRAC factor, the court found that the FEC's failure to complete its investigation of a 1982 administrative complaint before the 1984 election violated a "rule of reason." Id. at 5-7, J.A. at 120-21. The court applied the second TRAC factor to discern "statutory indication[s]" in the Campaign Act that Congress intended the Commission to act more quickly than it had in this case. Id. at 7-10, J.A. at 121-22. Under the third TRAC factor, the court reasoned that because of the sensitive nature of the electoral process, delay was less tolerable than under a regime of economic regulation. Id. at 10, J.A. at 122. In accordance with the fourth TRAC factor, the court concluded that ordering the Commission to act would not disrupt the Commission's other investigations. Id. at 10-11, J.A. at 122-22a. Finally, as indicated by TRAC 's fifth factor, the court decided that the Commission's delay had caused significant prejudice in this case. Id. at 11, J.A. at 122a.

Congressman Rose thereupon filed his application under EAJA for attorney's fees and litigation costs. The District Court determined that the Government was liable for costs and fees, relying primarily on Spencer v. NLRB, 229 U.S. App. D.C. 225, 712 F.2d 539 (D.C. Cir. 1983), cert. denied, 466 U.S. 936, 80 L. Ed. 2d 457, 104 S. Ct. 1908 (1984). In that decision, this court construed the EAJA as it existed prior to its extension and amendment in 1985 -- specifically, the provision that precludes recovery of costs and fees by a private party if the "position of the United States" is "substantially justified." Id. at 541. We held in Spencer that "position of the United States" refers to the Government's litigation position, not to the underlying agency action that spawned the litigation in the first instance. Id. at 557. We observed, however, that "only in a minority of cases does it matter whether a court . . . looks to the government's original behavior or to its subsequent legal ...

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