Surviving Motions to Dismiss And For Summary Judgment Creates Rebuttable Presumption Of Reasonableness Under EAJA
UNITED STATES v. PECORE (December 30, 2011)
The Bureau of Indian Affairs created the Hazardous Fuels Reduction program. Hazardous fuels, the accumulated dry brush and trees in a forest, increase the threat of wildland fires. In 2000, the Menominee Indian Tribe of Wisconsin submitted a proposal for federal funding of fire reduction work. The proposal asked for funds to create forest roads with fuel breaks alongside the roads. The Bureau approved the proposal and the Tribe began work. In 2001, after receiving reports of the Tribe's diversion of funds, the Bureau conducted a personal inspection of some of the work and concluded that the invoices overstated the work completed. After further meetings and exchange of information, a second personal inspection confirmed the Bureau's beliefs. The Office of Inspector General began an investigation. In 2005 the Bureau and the tribe discussed the results of the investigation and appeared ready to settle the government's charges. Settlement efforts broke down in 2006 and the United States filed suit under the False Claims Act against two individuals involved in the project. The two individuals prevailed at trial and moved for attorney's fees or sanctions. Judge Griesbach (E.D. Wis.) denied the motions. The individuals appeal.
In their opinion, Seventh Circuit Judges Bauer, Manion, and Kanne affirmed. Under the Equal Access to Justice Act, the district court could have awarded fees if it found that the government's position was not substantially justified. In order to be substantially justified, a position must be reasonably based on facts, reasonably based in law, with a reasonable connection between the facts and the law. The Court concluded that the district court did not abuse its discretion in finding that the government's position on both the facts and the law was reasonable. First, the government had reasonable grounds to believe that the defendants submitted false invoices in violation of the False Claims Act. Second, with respect to the facts, the Court emphasized that the government need not be correct and need not convince the jury. It only needs a reasonable basis. Here, the government survived a motion to dismiss and a motion for summary judgment, creating a rebuttable presumption that their position was reasonable. The record shows hotly disputed evidence and confusion in the Tribe's invoices. The district court did not abuse its discretion in finding reasonableness. The defendants also sought sanctions under Rule 37 for the government's refusal to make certain admissions with respect to expenses incurred for work performed. Again, the test is not whether a person prevailed on the issue, but whether he acted reasonably. The Court concluded the district court did not abuse its discretion when it concluded that the government acted reasonably.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select