SAMUEL R. PIERCE, JR., SECRETARY OF HOUSING AND URBAN DEVELOPMENT, PETITIONER V. MYRNA UNDERWOOD, ET AL. No. 86-1512 In the Supreme Court of the United States October Term, 1986 On Petition for A Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Reply Memorandum for the Petitioner 1. In arguing that the Court should not review this case to determine whether the government's position in the operating subsidy litigation was substantially justified within the meaning of the Equal Access to Justice Act (EAJA), respondents make a number of points that we do not dispute. It is certainly true, as respondents note and as we acknowledged in our petition (at 10), that a superior court's decision to stay a lower court's judgment will not be a factor that is likely to arise in run-of-the-mill EAJA litigation. Respondents also are correct in noting differences in the state of the law at the respective times that Dubose v. Pierce, 761 F.2d 913 (2d Cir. 1985), petition for cert. pending, No. 85-516, and this case were decided by the district courts, differences that we recognized in our supplemental brief (at 6 n.3) in Dubose. And we find no fault with respondents' suggestion that the disagreement between the Second and Ninth Circuits about the nature of the government's obligations under the now-defunct operating subsidy legislation does not, in and of itself, warrant this Court's consideration (see Dubose Supp. Br. at 5). /1/ Respondents, however, miss the larger point of our petition. They do not -- and could not -- deny that the courts of appeals have, in the absence of clear guidelines governing the resolution of EAJA disputes, reached seemingly conflicting conclusions in cases presenting quite similar issues. See Dubose Supp. Br. at 6-7. That development is well illustrated here: the Second and Ninth Circuits expressed irreconcilable views about the significance both of the settlement and of the stays in the operating subsidy litigation. See Pet. 8-9. /2/ Review of the decision below accordingly could offer the Court an opportunity to provide guidance to the lower courts about the nature of the EAJA "substantial justification" inquiry. 2. Respondents' defense of the hourly rate used to calculate the fee award in this case is without merit. We do not dispute respondents' statement (see Br. in Opp. 32-34 & n.21) that the post-settlement activity here was lengthy, /3/ and we do not dispute the ability or dedication of respondents' counsel (see Br. in Opp. 34-35). But this Court has held that those factors are presumptively reflected in the number of hours billed and in the attorney's hourly rate, and thus in the lodestar. See Pet. 15. Respondents have offered no reason to believe that either of those considerations -- or any of the other factors taken into account by the court of appeals -- justifies a departure from EAJA'S $74-per-hour fee cap. We showed in our petition (at 14-16) that treating such considerations as statutory "special factors" would conflict with the decisions of other circuits, and respondents nowhere contest that proposition. To the contrary, respondents defend the opinion below primarily by asserting that the court of appeals did not mean what it said (see Br. in Opp. 35-36, 40-41). That assertion is belied by the fees actually awarded by the courts below. Respondents also are incorrect in asserting that a departure from the $75-per-hour rate was justified in this case by the one "special factor" actually mentioned in EAJA, the limited availability of qualified attorneys. As we explained in the petition, the District of Columbia and Tenth Circuits have held that this factor may be invoked only in the "unusual situation where appropriately specialized legal services cannot be obtained in the market for $75 (an hour) or less." Vibra-Tech Engineers, Inc. v. United States, 787 F.2d 1416, 1420 (10th Cir. 1986). See Action on Smoking & Health v. CAB, 724 F.2d 211, 217 (D.C. Cir. 1984). In their carefully worded argument, respondents make no claim that this case involved such a situation and they make no claim that the courts below found them incapable of obtaining representation at a rate of $75 per hour (see Br. in Opp. 31 & n.21). /4/ In these circumstances, the other courts of appeals would not have approved a fee awarded at rates in excess of $75 per hour. /5/ For the foregoing reasons and the reasons stated in the petition, the petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Solicitor General APRIL 1987 /1/ While respondents are correct in stating that this case involved lengthy post-settlement activity while Dubose did not (Br. in Opp. 13-17), that consideration is simply irrelevant to the substantiality of the government's pre-settlement legal position on the operating subsidy question. /2/ Respondents assert (Br. in Opp. 24-27) that this Court's criteria for issuing stays have changed in recent years and that, in 1976, the grant of a stay entailed no consideration of the substance of the applicant's position. This assertion is incorrect. See, e.g., Times-Picayune Pub. Corp. v. Schulingkamp, 419 U.S. 1301, 1305 (1974) (Powell, J., in chambers) ("(T)here must be a significant possibility of reversal of the lower court's decision."); Coleman v. Paccar, Inc., 424 U.S. 1301, 1305 (1976) (Rhenquist, J., in chambers) (considering "probability of success on the merits" in vacating stay). Although this Court and its individual Justices have used various formulae in considering stay applications over the years, those formulae have generally entailed some consideration of the merits of the question sought to be presented. See Rostker v. Goldberg, 448 U.S. 1306, 1308 (1980) (Brennan, J., in chambers) (stating that the prospect of reversal is related to the question whether four Justices "will consider the issue sufficiently meritorious to grant certiorari"); Edwards v. New York, 76 S. Ct. 1058, 1059 (1956) (Harlan, J., in chambers) (stating test as "whether any of these matters is sufficiently debatable to lead to the belief that at least four members of the Court would vote to grant certiorari"). In the operating subsidy litigation, this Court not only issued a stay, but granted certiorari in the absence of a circuit conflict. /3/ In fact, however, much of the post-settlement activity of respondents' counsel was devoted to administering the settlement; counsel received compensation for time spent learning how to publicize the settlement and draft routine billing requests. See C.A. Record Excerpts 377-548. /4/ In the petition (at 14 n.4), we explained that the courts below could not have found an unavailability of counsel willing to undertake the representation here for $75 per hour or less: respondents' lawyers embarked on the representation in this case several years prior to the enactment of EAJA, when they could have had no expectation of a fee award -- and they expressly disavowed any intent to obtain a fee from the settlement fund. This establishes conclusively that a departure from the $75-per-hour cap was not necessary to attract qualified counsel. Our reasoning does not mean, as respondents argue (Br. in Opp. 32-33 & n.21), that a party who hires an expensive law firm is entitled to EAJA fees at more than the $75-per-hour rate; if that person could have obtained representation for a fee of $75 per hour, the "limited availability of qualified attorneys" exception would not come into play. Respondents also are incorrect in asserting (Br. in Opp. 34 n.21) that application of the statute as written would mean lower compensation for public interest attorneys than for private attorneys. Both would receive an identical "reasonable fee," with $75 per hour as the cap on the rate. /5/ Respondents also argue (Br. in Opp. 28-29) that the $75-per-hour issue is of limited importance because it has, thus far, arisen infrequently. In fact, the petition's list of cases involving such awards is not exclusive. See also Henderson v. Bowen, No. S-84-0011-EJG (E.D. Cal. Feb. 7, 1987), appeal pending, No. 87-1859 (9th Cir.); Barry v. Heckler, 638 F. Supp. 444 (N.D. Cal. 1986), appeal pending, No. 86-1802 (9th Cir.); Louis v. Nelson, 646 F. Supp 1300 (S.D. Fla. 1986), appeal pending, No. 86-5887 (11th Cir.). In any event, the issue may arise in every EAJA claim; given the court of appeals' decision in this case, excessive awards are likely to become considerably more common in the future.