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Feds Fight ‘Bad Faith” Fee Award to Supreme Court

June 17, 2019 | Posted in : Expenses / Costs, Fee Award, Fee Calculation Method, Fee Cap / Fee Limits, Fee Entitlement / Recoverability, Fee Issues on Appeal, Fee Shifting, Fees as Sanctions, Hourly Rates, Prevailing Party Issues

A recent Law 360 story by Suzanne Monyak, “Feds Fight ‘Bad Faith’ Fee Award in High Court No-Fly Suit,” reports that a Stanford-educated Malaysian woman who was mistakenly placed on the no-fly list does not deserve to recoup her full legal expenses from challenging that placement, the federal government told the U.S. Supreme Court, disputing the Ninth Circuit's finding that government attorneys had acted in "bad faith" during the lengthy litigation.

The full Ninth Circuit overstepped when it paved the way for Rahinah Ibrahim's attorney fee award to be bumped up from less than $500,000 to as much as $3.9 million, the U.S. Department of Justice said in its high court petition.  That higher fee award was based on the appeals court's finding that the federal government had acted in "bad faith" over the course of the decade-long litigation, reversing decisions from both the appellate panel and the lower court.  "As a unanimous panel of the court of appeals held, the district court's finding of no bad faith, as well as the underlying findings that support it, were correct or, at a minimum, not clearly erroneous," the petition says.  "The en banc court went out of its way, and out of its proper role, to rule otherwise."

Ibrahim sued the U.S. Department of Homeland Security and other government agencies after she, then a Ph.D. student at Stanford University on an F-1 student visa, was detained in 2005 at the San Francisco International Airport while en route to Malaysia because her name popped up on a no-fly list.  At the time, she was recovering from a hysterectomy and was in a wheelchair.  Although she was eventually released and able to leave the country, the government later revoked her student visa, and she has not been allowed to return to the U.S. because of her inclusion on several other terrorist watch lists.

After nearly a decade of litigation, Ibrahim prevailed during the first no-fly list bench trial of its kind, according to the majority opinion.  However, despite winning her case and commending the attorneys who worked on it, U.S. District Judge William Alsup only awarded her $419,987 in fees and $34,768 in expenses, which was a fraction of the $3.92 million in attorneys' fees and costs her firm McManis Faulkner had requested, finding that Ibrahim didn't win on all of her claims.

A three-judge Ninth Circuit panel upheld the district court's decision in August 2016, and she asked the full court for a rehearing, arguing that the government had used aggressive and secretive litigation tactics — including the use of 26 attorneys who spent thousands more hours on the case than McManis Faulkner's.

The majority of judges on the full court agreed.  In that January decision, the Ninth Circuit concluded that Ibrahim was entitled to full attorney fees under the Equal Access to Justice Act, a law that caps attorney's fees at $125 per hour unless the losing side acted in "bad faith."  Throwing out the district court's lower fee award, the full court ripped the federal government for engaging in years of "scorched earth litigation" despite knowing "all along" that the Muslim woman's inclusion on the Transportation Security Administration's no-fly list was a mistake.

The Ninth Circuit also faulted Judge Alsup's "piecemeal approach" to calculating fees based on the government's individual arguments instead of evaluating the government's conduct as a whole, and instructed the lower court to recalculate the fee in light of the new bad faith finding.  In the petition, the DOJ urged the justices to take up the case, stressing that the en banc court's ruling, if left standing, threatens to "undermine the government's efforts to fairly but vigorously litigate to protect the public interest in the future" and "unfairly impugns the integrity of the career government attorneys faithfully carrying out their duty to defend the government's policies and protect its sensitive information."