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FDIC Enforcement Decisions and Orders |
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Application for attorney fees under Equal Access to Justice Act denied. FDIC found that Respondents failed on all points to satisfy criteria for an award of fees. (For further proceedings relating to these dockets see [¶
[.1] Practice and ProcedureAppealsChange of ALJ
[.2] Equal Access to Justice ActTimeliness of Petition
[.3] Equal Access to Justice ActPrevailing Party
{{4-1-90 p.A-1427}}
This proceeding concerns an application for attorney fees filed under the Equal Access to Justice Act ("EAJA"), 5 U.S.C. §504, by three banks, * * * Bank * * *, * * *, * * * Bank * * * and * * * Bank, * * * ("Respondents"), arising out of a cease-and-desist action involving the three Banks. Under the EAJA, attorney fees and other expenses may be awarded upon a showing that Respondents meet the statutory qualifications, were the prevailing parties, and prove that the agency's position was not substantially justified in the underlying cease-and-desist proceeding. 5 U.S.C. §504.
[.1] Respondents allege that, because their EAJA application was heard by ALJ Michael O. Miller rather than ALJ William R. Gershuny (who presided over the underlying cease-and-desist proceeding), prejudice resulted. They allege that ALJ Miller did not understand all facets of the underlying proceeding, and they quote several sentences from the Decision in which he surmises that the power to approve or disapprove a bank's management may be implied from the management clause in the Order ultimately adopted by the Board. While the Board does not concur on that point, ALJ Miller's view was not critical to the ultimate decision since it relates to only one aspect of the requirements under the EAJAthat Respondents be the prevailing party. It does not address or otherwise relate to the other requirements involving net worth and substantial justification for the positions taken by the agency. In any event, the ALJ found valid additional bases for concluding that Respondents were not prevailing parties. Therefore, prejudice did not result since the ALJ's view of this issue was not dispositive of the ultimate conclusion regarding an award of attorney fees under the EAJA. Since Respondents set forth no other valid basis upon which the Board can conclude that they were prejudiced, we find no merit in this allegation.
ORDER
IT IS HEREBY ORDERED, that, for the reasons set forth in the Decision of the Board and in the Recommended Decision of the ALJ incorporated therein, Respondents' application for an award under the Equal Access to Justice Act, 5 U.S.C. §504, is denied.
In the Matters of
(Insured State Nonmember Banks)
RECOMMENDED DECISION AND
I. Statement of the Case
MICHAEL O. MILLER, Administrative Law Judge: On June 30, 1988, following issuance of Orders to Cease and Desist and a Decision, * * * Bank * * *, * * * Bank * * *, and * * * Bank, * * *, herein individually called * * *, * * * and * * * and collectively called the Banks or the Appli-
{{4-1-90 p.A-1428}}cants, filed an application for the payment of fees and other expenses pursuant to the Equal Access to Justice Act, 5 U.S.C. §504, herein called EAJA. In that application, the Banks asserted that they were eligible for benefits under EAJA, that they were the prevailing parties in the underlying adversary proceeding, that the position of Counsel for the Federal Deposit Insurance Corporation, herein called FDIC or the Board, was not substantially justified, and that the Banks' legal fees should be reimbursed at a rate in excess of the statutory limit because of the higher hourly rates paid for attorneys specializing in banking litigation.1
II. Findings of Fact
A. Summary of Litigation
On April 8, 1988, the FDIC issued separate Notices of Charges and Hearing against each of the Banks, pursuant to Section 8(b) of the FDIC Act, 12 U.S.C. §1818b. The Notices alleged that each bank had engaged in unsafe or unsound banking practices and, in the case of * * *, violations of law, that each Bank had been operated with management whose policies and practices had been detrimental to the Bank and had jeopardized the safety of the Bank's deposits, and that each Bank's board of directors had failed to provide adequate supervision and direction over the active officers of that Bank to prevent the unsafe and unsound banking practices and violations of law. The Banks filed timely answers, denying the substantive allegations.
B. Resolution of the EAJA Issues
1. Timeliness
[.2] EAJA, 5 U.S.C. §504, requires that a party seeking an award thereunder submit its application "within thirty days of a final disposition . . ." The FDIC's implementing regulation, 12 C.F.R. §308.104(b), requires that the application be filed no later than 30 days after service of the Board's final order. In the instant case, the application was dated June 29, and was mailed on June 30, 1988, more than 30 days after the purported May 24 date of issuance of the Order but less than 30 days after the June 10 issuance of the Decision.
2. The Net Worth Statements
In order to be eligible for an EAJA award, a corporation must have a net worth of less than $7,000,000 and employ less than 500 employees. 5 U.S.C. §504(B). Section 308.97(c) of the FDIC's implementing regu-
3. Prevailing Party
Applicant contends that it is a prevailing party because:
[.3] At first blush, it would appear that the Applicant had prevailed with respect to the management-acceptable clause; those words do not appear in the Board's Order. However, a careful reading of the record establishes that the Applicant was not a prevailing party. It litigated the FDIC's right to require such language solely as legal issues. It clearly and conclusively failed to prevail on the legal issues. The Board held that it had the legal authority to order inclusion of such language; it further rejected the Applicant's contention that the language was vague or overbroad. While the Board did not include that specific language in its Order, it declined to do so for reasons other than those asserted by the Applicant. It declined because the record, sparse because of the withdrawal of the answer, failed to fully explore the relationship between the Banks' unsafe or unsound practices and poor financial condition and the Banks' senior management.
4. Substantial Justification
A party prevailing in an adversary adjudication with an agency of the United States Government is entitled to fees and expenses unless the position of the agency was "substantially justified." The Supreme Court, in Pierce v. Underwood, 108 S. Ct. 2541 (1988), recently provided the definitive construction of "substantially justified:
IV. Proposed Conclusions of Law
1. The Application was timely filed.
V. Recommended Order
Based upon Proposed Conclusions of Law, Numbers 2, 3 and 4, above, it is recommended that the application for an
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Last Updated 6/6/2003 | legal@fdic.gov |