NIES, Chief Judge.
This is an appeal by the government from the judgment of the United States Claims Court granting Hong-Yee Chiu attorney fees under the Equal Access to Justice Act, 28 U.S.C. § 2412 (1988) (EAJA), in an amount of $39,001.44. The government contests both the Claims Court's decision that Chiu is entitled to an award of attorney fees, Chiu v. United States, 17 Cl.Ct. 334 (1989), and the Claims Court's interpretation of the EAJA with respect to calculating the amount of a cost of living adjustment (COLA) by which the court increased the statutory rate of $75 an hour, Chiu v. United States, 18 Cl.Ct. 567 (1989). We affirm the Claims Court's judgment insofar as entitlement is concerned, but reverse and remand on quantum.
The present appeal concerns an award of attorney fees incurred for litigation of a dispute over the elimination of Chiu's position by the National Aeronautics and Space Administration (NASA) via Reduction-in-Force (RIF), which occurred in 1978. After losing in the Civil Service Commission proceedings, Chiu filed suit in the United States Court of Claims pursuant to 5 U.S.C. § 7703(b)(1) (1978) (amended 1982). The Court of Claims remanded to the Merit Systems Protection Board (MSPB), which had become the administrative review tribunal, for reconsideration in light of a newly obtained deposition, that of Chiu's supervisor, Dr. Jastrow, the NASA official responsible for proposing the RIF of Chiu's position. On remand, the MSPB reviewed Dr. Jastrow's conduct and ruled that the RIF did not accord with the relevant regulations in that Dr. Jastrow had been motivated to eliminate Chiu personally because of Dr. Jastrow's dissatisfaction with Chiu's work rather than because of a need to eliminate the position he occupied. Accordingly, the MSPB directed NASA to reinstate Chiu with full back pay and benefits, which was done. Pursuant to the parties' stipulation, Chiu then filed an application with the Claims Court
On remand, the case was assigned to Judge Andewelt, who determined that the government's position was not "substantially justified" over the entire course of the RIF action and subsequent litigation before the MSPB and Court of Claims. Chiu, 17 Cl.Ct. at 340. He based this conclusion on the agency's failure to demonstrate that Jastrow's recommendation to separate Chiu was based on Chiu's area of research not being worthy of support rather than on dissatisfaction with Chiu's performance. Id. at 339. Further, he found no overriding justification for the position of the United States.
The EAJA provides for an attorney fee award based on a $75 per hour rate with certain possible adjustments. The Claims Court adjusted this rate to $102.73 per hour, construing the statute to allow an adjustment by reason of inflation from the time the $75 figure was set in 1981 to the date of the fee award on June 28, 1989, and applied that rate to all of the attorney's hours of work throughout the years of litigation. See Chiu, 18 Cl.Ct. at 571-72.
The government appeals the judgment both as to entitlement and quantum. We exercise jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1988).
A. Whether the Claims Court abused its discretion by determining that the government's position throughout these proceedings was not "substantially justified" within the meaning of the EAJA?
B. Whether the Claims Court erred as a matter of law in making an upward adjustment to the EAJA hourly fee rate for an increase in the cost of living which included time periods after legal services were performed?
A trial court's decision to award attorney fees under the EAJA, and its determination of the amount of such an award, are discretionary. On appeal, decisions concerning attorney fees are reviewed for abuse of discretion. See Pierce v. Underwood, 487 U.S. 552, 557-63, 108 S.Ct. 2541, 2545-49, 101 L.Ed.2d 490 (1988). Thus, only if the trial court erred in interpreting the law or exercised its judgment on clearly erroneous findings of material fact, or its decision represents an irrational judgment in weighing the relevant factors can its decision be overturned. PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1570-72, 6 USPQ2d 1010, 1015-16 (Fed.Cir.1988) (Bissell, J., additional views); Oliveira v. United States, 827 F.2d 735, 742 (Fed.Cir.1987); see also Friendly, Indiscretion About Discretion, 31 Emory L.J., 747, 762-63 (1982). Upon review of
The EAJA provides a specific waiver of sovereign immunity to enable persons who prevail in certain suits brought against the government to an award of attorney fees incurred in challenging the government's action in court. Fidelity Constr. Co. v. United States, 700 F.2d 1379, 1385-86 (Fed.Cir.), cert. denied, 464 U.S. 826, 104 S.Ct. 97, 78 L.Ed.2d 103 (1983). Section 2412(d)(1) provides, in relevant part:
28 U.S.C. § 2412(d)(1)(A). Absent this or some other specific statutory waiver of sovereign immunity, attorney fees may not be recovered in suits against the United States.
What meaning to ascribe to the statutory language that the "position of the United States" must be "substantially justified" is not readily apparent. As indicated previously, in 1985 the EAJA was amended to clarify the meaning of "position of the United States." Subparagraph (1)(B) of section 2412(d) was revised to read:
Similarly, subparagraph (2)(D) was added to reflect that
Prior to this amendment, this court had interpreted the "position of the United States" for purposes of evaluating whether a claimant was entitled to attorney fees to be limited to the position the government took during the litigation phase of the challenged government action. See Olsen v. Department of Commerce, Census Bureau,
Until clarified by the Supreme Court, appellate courts were similarly split as to the meaning of the phrase "substantially justified." Compare Gavette, 808 F.2d at 1467-68 (position must be "clearly reasonable") and Spencer, 712 F.2d at 558 (position must be slightly more than reasonable) with Foster v. Tourtellotte, 704 F.2d 1109, 1112 (9th Cir.1983) (position must have reasonableness in law and fact) and Ramos v. Haig, 716 F.2d 471, 473 (7th Cir.1983) (position must be reasonable). However, the Supreme Court in Underwood, 487 U.S. at 565, 108 S.Ct. at 2550, mandated:
Thus, applying the 1985 EAJA amendments to determine whether the overall position of the United States is substantially justified,
In this case, the Claims Court correctly looked to the overall position of the government, both prior to and during litigation. The Claims Court assumed the government's position in litigation before the Court of Claims to be reasonable, but found that the lack of substantial justification for taking the improper RIF action outweighed any reasonable positions taken thereafter:
Chiu, 17 Cl.Ct. at 340. The government disagrees with the Claims Court's conclusion with respect to the agency's justification for implementing the RIF on two grounds. First, the government contends that the position of the agency was substantially justified because the agency officials who actually approved the RIF had no improper motive or knowledge that Chiu's supervisor recommended the RIF of Chiu's position because he was dissatisfied with Chiu's work rather than simply desiring to
The government's first argument, as indicated, challenges the Claims Court's reliance on the motivation of Dr. Jastrow, who recommended the RIF action. Per the government, as a matter of law, the "position of the United States" at the agency level is to be assessed solely on the reasonableness of the position of the officials who actually took the action. And once this restriction is accepted, the position of the United States at the agency level is substantially justified because the NASA officials deciding to RIF Chiu's position were unaware of Jastrow's at that time unexpressed motivation, and had no reason to investigate his motivations before they acted on his recommendation that Chiu's position be RIF'ed. The government at no time has disagreed with petitioner on the principles of law applicable to the merits decision. Moreover, the record contains no evidence disputing the Jastrow deposition as a matter of fact.
The phrase "action or failure to act by the agency upon which the civil action is based" does not include unauthorized acts of employees which would not be subject to judicial review. That is not, however, the case here respecting Jastrow's action which was deemed the action of the agency in the ruling on the merits. No record evidence indicates that the NASA officials who implemented the RIF made a decision independently, that is, apart from Jastrow's recommendation. Judge Andewelt specifically found such evidence of independent action to be lacking. Chiu, 17 Cl.Ct. at 339. The government in its brief refers to the findings in the Federal Employee Appeals Authority (FEAA) decision that the evidence before the NASA officials at the time they approved the RIF supported that action, the Civil Service Commission Board's declining to review that decision, and the Court of Claims' opinion remanding to the MSPB.
Thus the government asks us to find substantial justification where the officials who were ultimately responsible did no more than rubber stamp a facially proper recommendation. We decline the government's invitation to absolve the agency on that basis. We conclude that the Claims Court did not abuse its discretion in rejecting the government's assertion of substantial justification in this case where the government cannot point to a genuine dispute over either the facts or the applicable law respecting the merits.
The government also seeks to negate Judge Andewelt's conclusion that the agency's action was not "substantially justified" because he did not defer to the findings made on Chiu's attorney fee application by Judge Yannello prior to the remand. Judge Andewelt discounted Judge Yannello's findings on the basis that she had "focused exclusively on the position of the United States during the court litigation and not on the correctness of [NASA's] original decision to separate plaintiff." Chiu, 17 Cl.Ct. at 337. The government, however, calls this statement either an error
Chiu, 6 Cl.Ct. at 23.
Assuming Judge Yannello's "findings" should be given the interpretation urged by the government, we would nevertheless uphold Judge Andewelt's independent evaluation as to the lack of "substantial justification" for the agency position. While the government urges "law of the case" constrained him from making new findings, we disagree.
In this regard, this case bears a striking resemblance to another recent case decided by this court, Exxon v. United States, 931 F.2d 874 (Fed.Cir.1991), wherein this court held that a successor judge assigned to take over a case after remand from this court was not required by law of the case, RUSCC 52,
Jamesbury [Corp. v. Litton Industrial Products, Inc.], 839 F.2d  at 1551, 5 USPQ2d  at 1784 [Fed.Cir.1988]
Id. at 878.
This reasoning applies with equal force in this case. Our initial affirmance of Judge Yannello's decision did not address expressly or implicitly her findings as to the government's prelitigation conduct. In that decision, we affirmed the Claims Court's application of the EAJA and BPA insofar as it concluded that the facts did not support an award of attorney fees for any of the litigation proceedings. As previously stated, however, no consideration of the agency's prelitigation conduct was necessary in making this determination. Thus, as in Exxon, the law of the case did not constrain Judge Andewelt in his EAJA analysis after the case was remanded. In the absence of any limitation imposed on Judge Andewelt by the doctrine of "law of the case" or expressly in the remand order, he committed no legal error in reassessing the record to redetermine whether Chiu was entitled to attorney fees under the EAJA.
The government next argues that even if Chiu is entitled to attorney fees under the EAJA, the Claims Court erred in its determination of the amount of such fees. Specifically, the government contests the hourly rate of $102.73 used by the Claims Court to compute the fee award. The EAJA sets the hourly rate for attorney fee awards at $75 and permits upward adjustments to this figure in two circumstances; for increases in the "cost of living" and where "special factors" are found to exist:
28 U.S.C. § 2412(d)(2)(A). The government's disagreement with the Claims Court's determination of the applicable hourly rate centers on the upward adjustment made to reflect increases in the cost of living during the litigation.
To adjust the base rate of $75 per hour for increases in the cost of living as provided by the EAJA, the court must first set a base date from which increases in the cost of living may be calculated. While the government once advanced the date of reenactment of the EAJA in 1985 as the base date in case after case, it now appears to have accepted that the original date of enactment of the statute, October 1, 1981, is the appropriate starting date. See Headlee v. Bowen, 869 F.2d 548, 549 (10th Cir.), cert. denied, 493 U.S. 979, 110 S.Ct. 507,
The next step for computing a COLA to the fee rate is establishing the end date or dates. The Claims Court used a single end date, namely the date judgment was entered granting the EAJA fee award, June 28, 1989. The government takes issue with use of that date, which is particularly significant here inasmuch as the attorney's services were in large part performed much earlier. The government's position is that any COLA after the date the attorney's services are rendered, i.e., post-performance, constitutes an award for delay in receipt of fee reimbursement. Per the government, such adjustment contravenes the no-interest rule reaffirmed by the Supreme Court in Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986). We agree. The EAJA does not authorize increases to the hourly rate in the nature of interest payments. Further, the no-interest rule obtains here to limit the COLA to the date on which legal services were performed and fees thereby incurred.
In Shaw, the Supreme Court invoked the no-interest rule to bar recovery of interest on an award of reasonable attorney fees pursuant to section 706(k) of the Civil Rights Act, 42 U.S.C. § 2000e-5(k). The Court set forth in Shaw two principles which are crucial to the disposition of this case. First, the Court soundly rejected any distinction between types of awards for purposes of the no-interest rule so long as the award compensated for the time value of money. Id. at 321-22, 106 S.Ct. at 2965. The second proposition is that no award in the nature of interest against the United States is permitted unless expressly and unambiguously authorized by statute. Id. at 323-24, 106 S.Ct. at 2966. Here, the post-performance adjustment to the attorney fee rate constitutes payment for the time value of money and, thus, the no-interest rule bars the award unless expressly and unambiguously authorized in the EAJA. We are further convinced that the EAJA does not mandate such adjustments to the hourly fee rate.
In including the post-performance time period within the COLA to the EAJA fee rate, the Claims Court characterized this adjustment as one that offsets the decrease in the value of the $75 fee limitation due to inflation until the decision was rendered that fees are to be paid by the government. See Chiu, 18 Cl.Ct. at 571. We agree that adjustment to the EAJA fee rate for post-performance periods has this effect. This characterization, however, clearly implicates the no-interest rule. As the Supreme Court stated in Shaw, 478 U.S. at 321, 106 S.Ct. at 2965:
That the Claims Court characterized the COLA as an adjustment for inflation is thus of no moment for purposes of the no-interest rule. Indeed, in rejecting any distinction between "interest" and "belated receipt of money," the Court expressly referred to adjustments for inflation by reason of delay as within the class of awards subject to the no-interest rule:
Id. at 322, 106 S.Ct. at 2965 (emphasis added). In the usual fee relationship, a preperformance COLA implicates no delay factor in receipt of moneys. Prior to services being performed, there is no obligation to pay and no fee incurred, except possibly in unusual circumstances not present here. Thus, in the pre-performance period there is no delay in receipt of moneys for attorney fees; an adjustment in the ceiling price for inflation during that period does not compensate for any delay; and such an adjustment can not properly be characterized as interest. Therefore, the COLA provision in the EAJA need not overcome the no-interest rule in order to permit the fee cap to be raised with respect to legal services performed thereafter.
The opposite is true after services are rendered. Where such services have been timely paid for by the client,
Thus, the Claims Court's analysis was flawed in discerning no difference in allowance of an adjustment for inflation whether pre- or post-performance. The latter situation implicates the no-interest rule, the former does not. See, e.g., Phillips v. General Servs. Admin., 924 F.2d 1577, 1583 (Fed.Cir.1991); Griffin & Dickson v. United States, 21 Cl.Ct. 1, 10 & n. 9 (1990) (Rader, J.); Cox Constr. Co. v. United States, 17 Cl.Ct. 29, 37 (1989); Kunz Constr. Co. v. United States, 16 Cl.Ct. 431, 439 (1989), aff'd, 899 F.2d 1227 (Fed.Cir. 1990).
Due to the applicability of the no-interest rule, to determine whether post-performance time periods may be included in adjusting the EAJA fee rate, we must look for explicit authorization. As the Supreme Court explained in Shaw, 478 U.S. at 318, 106 S.Ct. at 2963:
The Claims Court viewed the EAJA language of section 2412(d)(2)(A) which expressly permits the court to determine that "an increase in the cost of living ... justifies a higher [than $75 per hour] fee," as sufficient authorization for the court to include an adjustment for post-performance time periods "so long as the hourly rate
Were there any doubt on this interpretation, the language of the statute is at best ambiguous, and in accordance with the no-interest rule, awards in the nature of interest are not permitted except where the statutory mandate is unequivocal. Shaw, 478 U.S. at 318, 106 S.Ct. at 2963; Doyle v. United States, 931 F.2d 1546 (Fed.Cir. 1991). For the foregoing reasons, we conclude that an adjustment to the attorney fee rate cap to compensate for the plaintiff's economic loss due to delay is not a "cost of living" adjustment to the fee cap within the meaning of section 2412(d)(2)(A) of the EAJA. Thus, Chiu's EAJA attorney fee rate COLA can include only pre-performance time periods.
Chiu cites a number of cases from the District of Columbia Circuit and one Third Circuit case in an effort to support the inclusion of post-performance time inflation. None of these cases persuade us to a different result. With respect to the cases from the District of Columbia Circuit, that circuit adheres to the view that COLA's to the EAJA fee rate are restricted to the date services are performed. See Wilkett v. Interstate Commerce Comm'n, 844 F.2d 867, 875 (D.C.Cir.1988); Massachusetts Fair Share v. Law Enforcement Assistance Admin., 776 F.2d 1066, 1069 (D.C.Cir. 1985). However, that circuit adopted a position permitting adjustment to the fee rate for delay in receipt of fees as a "special factor." See Wilkett, 844 F.2d at 875-77 & nn. 4 & 5; Hirschey v. Federal Energy Regulatory Comm'n, 777 F.2d 1, 5 (D.C.Cir.1985). That position, however, has been expressly discredited by the Supreme Court in Underwood, 487 U.S. at 573, 108 S.Ct. at 2554, where the Supreme Court limited the cognizable "special factors," for purposes of fee rate increase, to those that are not of "broad and general application." It is not urged here that delay between the time that debt for legal services is incurred and the time an award under the EAJA is obtained may be deemed a "special factor," and we believe, in any event, it would suffer from the same no-interest defect as a COLA for post-performance inflation.
With respect to the Third Circuit case, Garcia v. Schweiker, 829 F.2d 396 (3d Cir. 1987), Chiu is correct that in that case the court refused to limit the COLA to the fee rate to the time services were rendered. The court in Garcia premised its conclusion on the belief that the agency should not reap the benefits of any inflation during litigation, and that attorneys should not have the purchasing power of their fees eroded by inflation. Id. at 402. We respectfully disagree with the position taken by the Third Circuit in Garcia. While the Third Circuit is correct that the agency "reaps the benefits" of any delay between the time services are performed and the time of award under the EAJA, the Third Circuit failed to acknowledge and discuss Shaw and the no-interest rule, which expressly serves the purpose of permitting the government to occupy an apparently favored position by protecting it from claims for interest that would prevail against private parties.
Commissioner v. Jean
As a final point, the government raises the Supreme Court's footnote in its recent decision of Commissioner v. Jean, 496 U.S. 154, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990), and argues that the attorney fee quantum determination must be remanded and redetermined to consider reductions to the fee award for the fee litigation phase of the Claims Court proceedings. In Commissioner v. Jean, the Supreme Court held that only one finding of no "substantial justification" was required under the EAJA to permit a fee award for the entire proceedings before that court, including litigation over the EAJA fee award. In a footnote, however, the Court indicated that its decision in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), required
Jean, 110 S.Ct. at 2321 n. 10. The Claims Court did not have the benefit of Jean at the time it rendered its quantum determination. In light of the need for remand to redetermine quantum, we agree with the government that any such quantum redetermination should take heed of the Supreme Court's Jean decision, particularly with regard to that portion of the fee litigation attributable to the government's contesting inclusion in the COLA to the fee rate an adjustment for post-performance inflation.
The Claims Court did not abuse its discretion in determining that Chiu was entitled to an award of attorney fees under the EAJA for the Court of Claims/Claims Court proceedings. However, the Claims Court misinterpreted the law by raising the EAJA fee rate to cover a cost of living adjustment up to the date of the fee award and applying that adjusted fee rate to all of the attorney work performed during the litigation. Consequently, we remand for redetermination of the EAJA fee award consistent with this opinion and the Supreme Court's opinion in Commissioner v. Jean.
No costs to either party.
AFFIRMED-IN-PART, REVERSED-IN-PART, and REMANDED.