Summary of a Recent
Judicial Development in
Administrative Law

Aggregation of Entities Not Required In
Determining Net Worth Under EAJA

Harrison M. Pittman
Staff Attorney

Summary of Decision

In Lion Raisins, Inc. v. United States, 57 Fed. Cl. 505 (Fed. Cl. 2003), the United States Court of Federal Claims held that the net worth of two other business related to an entity that requested attorneys' fees and costs under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, was irrelevant for purposes of determining whether the EAJA claimant was eligible to collect attorneys' fees and costs under EAJA. The court ruled on other grounds that the plaintiff was precluded from collecting attorneys' fees and costs under EAJA because it failed to satisfy certain eligibility requirements. See id. at 510.

Background

Plaintiff Lion Raisins, Inc. (Lion Raisins) was a raisin supplier that was suspended from bidding on certain government contracts by the United States Department of Agriculture (USDA). See id. at 506. Lion Raisins challenged its suspension, and in Lion Raisins, Inc. v. United States, 52 Fed. Cl. 629 (Fed. Cl. 2002) it was held that the USDA's decision to suspend Lion Raisins was arbitrary and capricious. See id. Lion Raisins subsequently filed a motion for attorneys' fees and costs under EAJA. See id. EAJA provides that a court "'shall award to a prevailing party other than the United States fees and other expenses . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.'" Id. at 508 (citation omitted). Under EAJA, "a party includes an 'organization, the net worth of which did not exceed $7,000,000 at the time the civil action was filed, and which had not more than 500 employees at the time the civil action was filed.'" Id. (citing 28 U.S.C. § 2412(d)(2)(B)(ii)).

Arguments

The government opposed the motion, arguing that Lion Raisins was precluded from collecting attorneys' fees and costs under the EAJA because it did not meet the eligibility requirements set forth in the EAJA. See id. More specifically, the government argued that Lion Raisins could not collect fees and costs under EAJA because it was not a "party" for purposes of EAJA. See id. at 508. The government asserted that Lion Raisins was an affiliate of two other business entities and that the net worth of these entities should be aggregated in determining Lion Raisin's net worth. See id. The government contended that once the net worth of the entities was aggregated, Lion Raisins would exceed the $7,000,000 net worth threshold and therefore would be ineligible to collect attorneys' fees and costs under EAJA. See id.

Analysis and Holdings

The court explained that in National Ass'n of Manufacturers v. Department of Labor, 159 F.3d 597 (D.C. Cir. 1998), the D.C. Circuit concluded that the plain language of EAJA "counseled against aggregating the net worth of . . . [business entities] . . . ." Id. at 510 (citations omitted). It also explained that in Texas Food Indus. Ass'n v. USDA, 81 F.3d 578 (5th Cir. 1996), the Fifth Circuit held that "[t]he 'language [of the EAJA] is clear and unambiguous . . . . [I]t imposes a ceiling only on the net worth and size of the association itself . . . . We are unpersuaded, moreover, that EAJA's special eligibility rule for agricultural cooperatives and non-profit organizations is evidence of an implicit aggregation rule.'" Id. (citation omitted).

The court determined that the net worth of the two business entities related to Lion Raisins was irrelevant. See id. It held that

[t]he jurisprudence makes clear that aggregation, if required at all, is necessary only when the underlying litigation pursued by the . . . claimant substantially benefitted another party, or if the claimant was not the real party in interest to the underlying litigation. This is not the situation in the case at bar. . . . Most important to the issue of aggregation, only plaintiff had a direct interest in the underlying lawsuit. While . . . [the other entities] may profit from plaintiff's ability to perform government contracts, even the more restrictive formulations of EAJA eligibility would not require aggregation for this type of attenuated benefit from the underlying litigation.

Id. (citations omitted).

The case was decided on August 20, 2003; this summary was posted Aug. 3, --> 2004.