On March 25, 2008, the United States District Court for the Western District of Missouri announced its decision in Zarcon, Inc. v. NLRB, No. 06-3161 (W.D. Mo. Mar. 25, 2008), ruling that changes made to the FOIA's attorney fees provision as part of the OPEN Government Act of 2007, Pub. L. No. 110-175, 121 Stat. 2524, "are not retroactive." Zarcon, slip op. at 4. In making its ruling, the court rejected a motion for attorney fees made by the plaintiffs, who had received a previously withheld document as part of a settlement agreement they voluntarily entered into with the National Labor Relations Board (NLRB) prior to December 31, 2007, the date the OPEN Government Act was signed into law.
The changes made to the FOIA's attorney fees provision provide that one of the ways a FOIA plaintiff can be deemed to have "substantially prevailed" in a FOIA lawsuit is if the "complainant has obtained relief through . . . a voluntary or unilateral change in position by the agency, if the complainant's claim is not insubstantial." OPEN Government Act of 2007, § 4(a)(2)(ii)(II). This standard is different from that set forth in the Supreme Court's decision in Buckhanon Board and Care Home, Inc. v. West Virginia Dep't of Health and Human Resources, 532 U.S. 598, 605 (2001), where the Court held that a plaintiff is eligible for an award of fees only if a change in agency position comes about as the result of an "enforceable judgment[ ] on the merits [or a] court-ordered consent decree[ ]," id. at 604, and not if the change is the result of voluntary action by the agency, id. at 605.
In Zarcon, the plaintiff made a motion for attorney fees based upon NLRB's voluntary decision (as part of a settlement agreement) to release an affidavit it had previously withheld. NLRB had previously withheld the document on privacy grounds; the decision to release came after Zarcon independently learned the identity of the affiant, thus leaving NLRB no reason to protect the affidavit itself.
NLRB argued that because this release came voluntarily, rather than as the result of a judicial order, Zarcon had not substantially prevailed under the Buckhanon standard. Zarcon disputed this on two grounds: first, it argued that the Eighth Circuit had never recognized Buckhanon's applicability in FOIA cases. Second, it claimed that regardless of Buckhanon's prior applicability, the district court should apply the new attorney fees standard set forth in the OPEN Government Act, even though the law was passed after NLRB's release of the affidavit in question and after the parties had settled the case. (The settlement agreement was entered into on October 19, 2007, more than two months before President Bush signed the OPEN Government Act into law.)
The district court rejected both of Zarcon's arguments. It first noted that though the Eighth Circuit had not had occasion to rule specifically on Buckhanon's applicability to FOIA cases, Eighth Circuit precedent indicated that Buckhanon does apply "'broadly to fee shifting statutes that employ the "prevailing party" language,'" a category that "is the functional equivalent" of the FOIA's "substantially prevailed" language. Zarcon, slip op. at 3.
More significantly, the court held that the standard newly imposed by the OPEN Government Act "does not apply to this case because it did not take effect until December 31, 2007, and its modifications of the FOIA fee shifting provision are not retroactive." Id. at 4. In making its ruling, the court relied on a recent Supreme Court decision, Fernandez-Vargas v. Gonzales, 548 U.S. 30 (2006), in which the Court discussed standards used to judge whether or not a statute should be applied retroactively.
In applying Fernandez-Vargas, the district court first noted that "Congress is silent about the temporal reach of the new FOIA fee shifting provision, and the statute does not provide any evidence that Congress intended the statute to be retroactive." Zarcon, slip op. at 5. Moreover, the district court held that applying the provision retroactively would "negatively affect the NLRB's rights, liabilities, and duties with respect to its obligation to pay for plaintiffs' attorney fees" because it would hold NLRB to a standard that was not in place at the time the agency took the action in question (voluntarily releasing the affidavit as part of a settlement agreement). The district court pointed out that "[t]hroughout the time that plaintiffs incurred the fees that they seek to have reimbursed, the former FOIA fee provision applied." Id. As the district court explained, "[i]t would be unfair to now require the NLRB to pay fees under a new law that they did not and could not consider at the time that they decided to settle their dispute with plaintiffs. The statute should not be construed to impose new obligations on the NLRB due to its settlement with plaintiffs that the NLRB could not have foreseen when it agreed to the settlement." Id. (posted 3/27/2008)