text:
    Norma HOLDEN, et al., Plaintiffs, and State of Ohio, Through Richard F. Celeste, Governor, Plaintiff-Intervenor, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. C84-548.
    United States District Court, N.D. Ohio, E.D.
    Aug. 27, 1985.
    David B. Dawson, Louise McKinney, Carolyn L. Carter, Legal Aid Soc. of Cleveland, Mark J. Valponi, Kelley, McCann & Livingstone, Fred P. Schwartz, Hahn, Loeser, Freedheim, Dean & Wellman, Cleveland, Ohio, for plaintiffs.
    Kathleen Ann Sutula, Steven D. Bell, Michael Anne Johnson, Asst. U.S. Attys., Cleveland, Ohio, for defendant.
   MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.

The prevailing plaintiffs in this social security disability class action seek attorneys’ fees, costs and expenses from the Secretary of Health and Human Services (“Secretary”) under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412. Under the statute, fees must be awarded unless “the position of the United States” —the Secretary’s substantive position and the government’s litigating position—was “substantially justified.” Review of the recently-amended statute, the relevant Sixth Circuit case law and the lengthy history of this action compels the conclusion that the Secretary’s positions were unjustified and that an award under the EAJA is appropriate.

I.

The EAJA was enacted in 1980. Following enactment of the Equal Access to Justice Act Amendments (“EAJA Amendments), 28 U.S.C. § 2412(d)(1)(A) now provides:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort, including proceedings for judicial review of agency action) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

The newly-enacted 28 U.S.C. § 2412(d)(2)(D) provides:

... “position of the United States” means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based; except that fees and expenses may not be awarded to a party for any portion of the litigation in which the party has unreasonably protracted the proceedings.

And another new provision, § 206(b) of the EAJA, provides in part:

Section 206(b) of the Social Security Act (42 U.S.C. 406(b)(1)) shall not prevent an award of fees and other expenses under section 2412(d) of title 28, United States Code____

While § 206(b) is consistent with the Sixth Circuit’s view that EAJA fees were available in social security cases, Feldpausch v. Heckler, 763 F.2d 229 (6th Cir. 1985); Couch v. Secretary of Health and Human Services, 749 F.2d 359 (6th Cir. 1984) (per curiam), in several important areas the recent amendments and their accompanying legislative history modify the court of appeals’ prior approach. Most significantly, 28 U.S.C. § 2412(d)(2)(D) explicitly overrules the position enunciated in Trident Marine v. District Engineer, The United States Army Corps of Engineers, Detroit District, 766 F.2d 974 (6th Cir. 1985). There the court held that the “position of the United States” referred only to the government’s litigating position, not to the underlying agency position or to a hybrid of the agency position and litigating position. Id. at 977-980. The legislative history accompanying § 2412(d)(2)(D) states that this view is inconsistent with Congressional intent in enacting the EAJA:

... The term “position of the United States ...” was not explicitly defined under the prior law, causing courts much confusion as to the proper scope of an EAJA proceeding. The Committee here defines the “position” term in a way to clarify the EAJA, consistent with the original Congressional intent and the underlying purposes of the statute____
In clarifying the “position” term, the Committee expressly rejects the holding ... that the only government “position” to be scrutinized in the context of an EAJA case is that taken in the litigation itself.
This restrictive view, adopted by several ... courts of appeal has resulted in the denial of a number of meritorious fee claims, because it fails to focus attention on the unjustified government activity that formed the basis of the litigation.
If the government’s litigation position was the sole consideration, the government could insulate itself from fee liability simply by conceding error or settling, because such actions will always be deemed “reasonable” litigation positions; thereby having the effect of substantially justifying their position.... Interpreting the EAJA so as to restrict its application to mere litigation arguments and not the underlying action which made the suit necessary, would remove the very incentive for careful agency action that Congress hoped to create in 1980....
The Committee’s clarification of the “position” term is intended to broaden the court’s ... focus of inquiry for EAJA purposes beyond mere litigation arguments, and to require an assessment of those government actions that formed the basis of the litigation. We believe this conclusion is implicit in. the EAJA definition of the term “United States”, which “includes any agency and any official of the United States acting in his or her official capacity” (28 U.S.C. § 2412(d)(2)(C)), rather than merely the position taken by the government’s lawyers. The Committee here makes the broader view of government agency conduct explicit.
In cases where the private party is a prevailing plaintiff, the definition of “position of the United States ...” will likely include an assessment of the agency action or failure to act that forms the basis of the party’s cause of action. The “action or failure to act by the agency upon which the court action ... is based” does not include mere preliminary or procedural decisions of the agency which would not be subject to judicial review. Thus, in evaluating a prevailing plaintiff’s EAJA petition, the court ... will consider the agency action or failure to act that gave rise to the party’s right to bring the action in a federal court ... The question that exactly constitutes such action will be determined by the court ... record of the case.

H.R.Rep. No. 99-120, 99th Cong., 1st Sess. 12-13 U.S.Code Cong. & Admin.News 1985, pp. 132, 140-141. (“House Report”) (citations and footnote omitted).

Similarly, the Amendments alter the definition of “substantially justified” previously utilized by the Sixth Circuit, namely that “[t]he governing principle of the [EAJA] is that the ‘United States’ should pay those expenses which are incurred when the government presses unreasonable positions during litigation.” Westerman, Inc. v. NLRB, 749 F.2d 14,16 (6th Cir.1984) (citation omitted) (emphasis added). See also Kreimes v. Dept. of Treasury, 764 F.2d 1186 (6th Cir.1985) (“The purpose of the [EAJA] is to award litigants ‘expenses of seeking review of or defending against unreasonable government action.’ ”); Sigmon Fuel Co. v. Tennessee Valley Authority, 754 F.2d 162, 166 (6th Cir.1985) (“Whether or not the government’s position is substantially justified is judged by the reasonableness of the government’s position.”); Wyandotte Savings Bank v. NLRB, 682 F.2d 119, 120 (6th Cir.1982) (per curiam). The Report states:

Another problem which has developed in the implementation of the Act has been the fact that courts have been divided on the meaning of “substantial justification.” Several courts have held correctly that “substantial justification” means more than merely reasonable. Because in 1980 Congress rejected a standard of “reasonably justified" in favor of “substantially justified,” the test must be more than mere reasonableness.
Especially puzzling, however, have been statements by some courts that an administrative decision may be substantially justified under the Act even if it must be reversed because it was arbitrary and capricious or was not supported by substantial evidence. Agency action found to be arbitrary and capricious or unsupported by substantial evidence is virtually certain not to have been substantially justified under the Act. Only the most extraordinary special circumstances could permit such an action to be found to be substantially justified under the Act.
The Committee expects that the determination of what is “substantially justified” will be decided on a case-by-case basis due to the wide variety of factual contexts and legal issues which make up government disputes.

Id. at 9-10, U.S.Code Cong. & Admin.News 1985, p. 138 (footnotes omitted) (emphasis added).

With these standards in mind, this Court turns to the history of this case and the merits of the pending application. Familiarity with this Court’s numerous previous opinions is presumed. A review of the factual and legal conclusions set forth there demonstrates that neither the Secretary’s actions nor the government litigating position were, in fact, substantially justified.

II.

A.

This class action concerned the policies and procedures by which the Secretary and state officials terminated disability benefits previously awarded under Title II and Title XVI of the Social Security Act (“the Act”), the Social Security Disability Insurance (“SSDI”) and Supplemental Security Income (“SSI”) programs. The relevant termination provision, 42 U.S.C. § 423(a)(1)(D), provided that benefits would stop after a claimant’s “disability ceases.”

Reviewing the legislative history, this Court found that one important Congressional committee “consistently has read the phrase ‘disability ceases’ to require that the claimant’s medical condition actually have improved before his benefits may be terminated”—the “medical improvement standard” or “presumption of continuing disability.” Holden v. Heckler, 584 F.Supp. 463, 469 (N.D.Ohio 1984). It further found that:

Secretaries of Health, Education and Welfare concurred with Congress’ reading of the statutes and applied a medical improvement standard to disability terminations from 1954 until 1976. So did various courts which interpreted the Act during those years. See Hall v. Celebrezze, 314 F.2d 686, 688 (6th Cir.1963) (“Once a condition has been shown to exist, there is a presumption, in the absence of proof to the contrary, that it has continued.”)

Id. at 470.

The opinion then explained that the Secretary abandoned the medical improvement standard in 1976 and instituted a “standard of current disability,” which was codified in regulations promulgated in 1980 and incorporated in numerous internal publications of the Social Security Administration (“SSA”). Id. at 470-71. Under this policy, more than 23,000 Ohio residents were terminated from the disability rolls. Id. at 471-72.

Next, a review of recent case law demonstrated that

... Using different language, ten circuit courts of appeals have held that the Secretary may not terminate disability benefits without offering substantial evidence that the record supporting the initial determination of disability is no longer valid.
The standard imposed by the courts has been called either a “medical improvement standard” or a “presumption of continuing disability.”
* * * * * *
Clearly the “medical improvement” and “presumption of continuing disability” standards are substantively identical ____ “Under either standard benefits may not be terminated without showing that the recipient’s medical condition has improved.” By whatever name, this is the law in ten circuits.

Id. at 473-74 (citation and footnote omitted). The opinion continued:

The Sixth Circuit is one of those circuits. Hall v. Celebrezze is one of the earliest cases adopting a “presumption of continuing disability” standard. And Hayes v. Secretary of Health, Education and Welfare, 656 F.2d 204 (6th Cir.1981)—an opinion written after the Secretary issued the 1980 regulations— imposed a “medical improvement” standard for the circuit. Reversing administrative and lower court rulings that had terminated the SSI benefits of a 23-year-old mentally retarded woman, the court wrote:
... We find that the evidence does not support the conclusion that the termination of Hayes’ benefits was proper because her condition had improved.
... If at some time in the future the training is found to have been successful and Hayes’ condition has improved, the Secretary may of course reevaluate the award in light of the changed circumstances.

Id. at 206.

As the Sixth Circuit’s only published case dealing with the medical improvement standard, Hayes is the governing law for this Court. Moreover, the position stated there was vigorously reaffirmed in two subsequent Sixth Circuit opinions. Burnett v. Secretary of Health and Human Services, 703 F.2d 559 (6th Cir.1982), reversed the Secretary’s decision to terminate Burnett’s benefits because no showing had been made to satisfy the [relevant] test ...:

... In termination cases, the Secretary bears the burden of proving either: (1) that the claimant’s condition has improved since the initial award of benefits; or (2) that the claimant’s condition is not as serious as first supposed. See 20 C.F.R. 404.1539(a)(1); Miranda v. Secretary [of Health, Education and Welfare, 514 F.2d 996 (1st Cir. 1975) ], ...; Weber v. Harris [640 F.2d 176 (8th Cir.1981)]....
In the present matter the Secretary failed to introduce evidence which supports either proposition. There is nothing whatsoever in the record to indicate that Mr. Burnett’s health has improved since 1976 ...

A second case, Hall v. Secretary of Health and Human Services, 711 F.2d 1056 (6th Cir. 1983), utilized the presumption of continuing disability standard____ [I]t held that an initial grant of benefits

... places the burden of producing evidence to rebut the presumption on the Secretary____ That is, the Secretary must produce evidence of improvement in the claimant’s condition.

The law of the Sixth Circuit is clear: no recipient of SSDI or SSI disability benefits may be denied those payments unless the Secretary produces substantial evidence demonstrating that the recipient is no longer disabled within the meaning of the law.

Notwithstanding these rulings, the Secretary has not applied Hayes to any other disability terminations; rather, she has continued to instruct [state officials and administrative law judges] to follow SSA’s regulations and internal procedures, mandating a current disability standard ...

Id. at 474 (citations and other footnote omitted).

B.

The next portion of the opinion dealt with the factual histories of the named plaintiffs in Holden and its companion ease, Brest v. Heckler, No. C83-4893 (N.D.Ohio filed Dec. 14, 1983), and need not be repeated here. The Court then addressed jurisdictional issues presented by the Act’s judicial review provision, 42 U.S.C. § 405(g). It was noted that:

The literal language of the section specifies three requirements for judicial review: (1) the final decision of the Secretary after a hearing; (2) commencement of a civil action within sixty days after the mailing of the notice of the decision, or within such times as otherwise provided; and (3) filing of the action in an appropriate district court.
While the requirement of a final decision by the Secretary is “central to the requisite grant of subject-matter jurisdiction”, Weinberger v. Salfi, 422 U.S. 749, 764 [95 S.Ct. 2457, 2466, 45 L.Ed.2d 522] (1975),
... this condition consists of two elements, only one of which is purely “jurisdictional” in the sense that it cannot be “waived” by the Secretary in a particular case. The waivable element is the requirement that the administrative remedies prescribed by the Secretary be exhausted. The nonwaivable element is the requirement that a claim for benefits shall have been presented to the Secretary.

Mathews v. Eldridge, 424 U.S. 319, 328 [96 S.Ct. 893, 899, 47 L.Ed.2d 18] (1976). 584 F.Supp. at 480.

Class members satisfied all applicable requirements. With respect to presentment, it was noted that all members of the proposed class “have presented or will present a claim to the defendants that their disabilities have continued ...” Id. at 481. With respect to exhaustion, it was found that this action fit into all three situations in which courts may waive the exhaustion requirement—that the claims presented were collateral to the direct claim for the payment of benefits, that requiring exhaustion would cause substantial hardship and irreparable harm, and that exhaustion of administrative procedures would be futile. Id. at 482-83. The sixty-day requirement was waived for the same reasons. Id. at 483.

C.

Following resolution of the jurisdictional issues, a class action was certified pursuant to Fed.R.Civ.P. 23(b)(2), and the Court turned to plaintiffs’ request for a preliminary injunction. Applying the Sixth Circuit’s four-part test governing issuance of such equitable relief, the Court first found that plaintiffs possessed a strong or substantial likelihood of success on the merits. Those remarks merit repeating:

Social Security cases in the Sixth Circuit have proceeded according to two separate and irreconcilable standards of law. Since July 24, 1981, the court of appeals, in the Hayes, Hall and Burnett cases, has articulated and applied a medical improvement standard. That court and district courts have repeatedly ordered the Secretary to restore benefits when the record contains no evidence that the claimant’s condition has improved. Within the SSA and [state] administrative system, however, the Secretary has ignored the law of this circuit and continued to terminate individuals without demonstrating any medical improvement. Absent some compelling argument that a federal agency can legitimately ignore federal appeals court precedent, it is clear that the plaintiffs will prevail on the merits of this case.
The Secretary’s response is to state that the Sixth Circuit decisions in Hayes, Hall, and Burnett were only binding on the litigants in those cases.
... [T]here is no indication that the Secretary, having lost any of the cited cases, has refused to abide by the decision in respect to the individual parties therein. Plaintiffs claim only that the Secretary is not paying benefits to other persons who assert that their cases are similar to these individuals. But since those are different claims asserted by different parties, res judicata does not compel the Secretary to follow the results obtained in those cases.

Post Hearing Brief at 27.

Her argument is utterly meritless. In Kitchen Fresh, Inc. v. NLRB, 716 F.2d 351, 357 (6th Cir.1983), the Sixth Circuit sternly rebuked the National Labor Relations Board for refusing to follow the prior case law of the circuit. The court of appeals had consistently required the NLRB to consider the entire administrative record compiled by the Regional Director; the Board stated that it “disagree[s] with the Sixth Circuit’s holding and respectfully decline[s] to follow it.” Southwest Color Printing Corp., 247 NLRB 917 (1980). Judge Celebrezze— who formerly headed ... the Department of Health, Education and Welfare, and in that capacity supervised the SSA—responded for the court in Kitchen Fresh:

The Board’s refusal to apply the [Sixth Circuit] rule in cases arising in Michigan, Ohio, Kentucky and Tennessee is particularly disturbing. Although the Board is charged with the responsibility of formulating national labor policy, the courts bear the final responsibility for interpreting the labor laws ... [s]ee Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 [2 L.Ed. 60] ... (1803); the Board is bound to apply the law of the circuit in which a case arises ... “We do not expect the Board or any other litigant to rejoice in all the opinions of this Court____ However, the Board cannot, as it did here, choose to ignore the decision of this court as if it had no force or effect. Absent reversal, the decision is the law which the Board must follows.”
716 F.2d at 357 n. 12 (citations omitted). See also Beverly Enterprises v. NLRB, 727 F.2d 591, 593 (6th Cir.1984) (per curiam) (“The basic doctrine that, until reversed, the dictates of a Court of Appeals must be adhered to by those subject to the appellate court’s jurisdiction applies equally to the precedential rule of stare decisis and the policy rule respecting the law of the case.”).
The same rule applies to the Secretary, the SSA, and its affiliated state agencies. Lopez v. Heckler, 713 F.2d 1432, 1438 (9th Cir.1983) ... (denying Secretary’s motion to stay injunction pending appeal); Hyatt v. Heckler, 579 F.Supp. [985,] 1001 [ (W.D.N.C.1984) ] (“A cabinet member is not above the law of the land, but is obligated to follow it. The Secretary is free to argue her position in any case she chooses, but, absent express authority from Congress or the federal courts, she can not offer an appeal in a newly-filed and unrelated case as an excuse to evade the law in this case.”).
The Secretary also contends that her “non-acquiescence” policy is within the scope of United States v. Mendoza, 464 U.S. 154, 104 S.Ct. 568 [78 L.Ed.2d 379] (1984). There the Supreme Court held that the doctrine of nonmutual collateral estoppel did not prevent the federal government from relitigating a constitutional issue adjudicated against it in a different lawsuit brought by a different party. No court in this circuit has barred the Secretary from relitigating the legal conclusion reached in Hayes and its progeny. But until she prevails in such a case, she must follow the established law. “The pertinent holding of Mendoza was only that the government must be allowed to challenge a law in court on its merits, not that an officer of the government may disobey court decisions with which he or she disagrees.” Hyatt v. Heckler, 579 F.Supp. at 1002.
In sum, there is a strong probability that the plaintiffs will ultimately prevail on their statutory claim....

584 F.Supp. at 490-91.

Based on the factual record, the Court then found that denial of the injunction would cause plaintiffs irreparable harm while issuance of relief would not cause equal hardship for the Secretary. Finally, the question of whether the “public interest” would be served by the injunction was discussed:

... [T]he public interest requires that this Court condemn the Secretary’s contempt for the rule of law. In essence, her position has been that she can apply whimsically whatever standard she wishes in reviewing an individual’s continued eligibility for disability benefits, no matter what the federal courts may say about the requirements of the Act, and no matter how tragic, or tragi-comic, the results. The Secretary’s stance is simply an affront to our constitutional system. To repeat Justice Brandéis’ famous words:
Decency, security, and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to obey the law scrupulously. Our government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example ____ If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy....
Olmstead v. United States, 277 U.S. 438, 485 [48 S.Ct. 564, 575, 72 L.Ed. 944] (1928) (Brandéis, J., dissenting).

Id. at 493 (footnote omitted).

Pursuant to these conclusions, a preliminary injunction was issued setting forth procedures for reinstatement of benefits to class members who had been terminated because of the Secretary’s arbitrary, capricious and illegal actions. Id. at 494-96.

D.

Immediately after the issuance of the preliminary injunction opinion in this case, on April 30, 1984, the Supreme Court and the Sixth Circuit issued four opinions in cases involving the SSA. The Secretary moved for a stay pending appeal.

Analysis of the motion began by noting that on May 14, 1984, Haynes v. Secretary of Health and Human Services, 734 F.2d 284 (6th Cir.1984), explicitly reaffirmed the Sixth Circuit’s adherence to Hayes and the presumption of continued disability. Next, the Court held that nothing in Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), provided any support for the Secretary’s contention that class members had failed to satisfy the exhaustion requirement under § 405(g). See Holden, 584 F.Supp. at 499. Finally, regarding the sixty-day requirement, the Court held that the Supreme Court’s first three rulings in Heckler v. Lopez, 463 U.S. 1328, 104 S.Ct. 10, 77 L.Ed.2d 1431 (1983) (Rehnquist, Circuit Justice), 464 U.S. 879, 104 S.Ct. 221, 78 L.Ed.2d 217 (1983), and — U.S. —, 104 S.Ct. 2164, 80 L.Ed.2d 548 (1984), required that a stay pending appeal be issued “with respect to the claims of class members whose benefits were terminated before July 3, 1983, or who completed the administrative process before July 3, 1983,” 584 F.Supp. at 503, but that those opinions did not otherwise undermine the propriety of a class certification and issuance of a preliminary injunction.

E.

The Secretary appealed, but Congressional action during the pendency of the appeal prompted both sides to seek a remand of all class members’ claims to the Secretary. The remand opinion, Holden v. Heckler, 615 F.Supp. 682 (N.D. Ohio 1985), stated:

On October 9, 1984, the President signed the Social Security Disability Benefits Reform Act of 1984 (“the Act”), Pub.L. No. 98-460, 98 Stat. 1794 (1984). Portions of the Act codified the “medical improvement” standard for reviewing disability benefits terminations. In addition, §§ 2(d)(2)(C) and 2(d)(3) of the Act provide that district courts shall remand to the Secretary the cases of persons whose benefits have been terminated and who were named and unnamed members of a “medical improvement” class action pending as of September 19, 1984. The Secretary is to notify class members of their rights under the Act; they in turn may request a review of their case and a restatement of benefits pending the Secretary’s initial redetermination.
Interpreting the Act, the Supreme Court has directed district courts to remand two pending class actions to the Secretary for review pursuant to the Act. Heckler v. Lopez, — U.S. —, 105 S.Ct. 583 [83 L.Ed.2d 694] (1984); Heckler v. Kuehner, — U.S. —, 105 S.Ct. 376 [83 L.Ed.2d 312] (1984). Both remand orders recognize the district court’s continuing jurisdiction following remand. Consistent with the Act, the Sixth Circuit Court of Appeals has directed this Court in this action “to remand to the Secretary for further consideration under the Act.” Brest v. Secretary of Health and Human Services, 754 F.2d 372 (6th Cir.1984). Upon consideration of the Act, the Supreme Court rulings, the Sixth Circuit’s mandate, the arguments raised at a status conference on January 11, 1985, and the proposed orders subsequently submitted by counsel, it is hereby ordered that:
(1) The case of named plaintiff Larry McGinty is remanded to the Secretary for review pursuant to § 2(d)(2)(C) of the Act;
(2) The cases of the unnamed class members are remanded to the Secretary for review pursuant to § 2(d)(3) of the Act;
(3) The partial stay pending appeal entered by this Court on May 29, 1984 is vacated; and
(4) This Court retains jurisdiction to take other actions appropriate in light of the Act. Within fourteen (14) days, the Secretary shall either (1) respond to all issues in the plaintiffs’ motion for summary judgment and remand which have not been mooted by this order, or (2) submit a pleading supporting her contention that this action should be dismissed without prejudice. If the Secretary files a motion to dismiss, the plaintiffs shall respond within ten (10) days thereafter.

Id. at 683-684 (footnotes omitted).

When the Secretary appealed an order denying a stay pending appeal of another order directing the issuance of appropriate notice of the remand to class members, the Sixth Circuit summarily denied the request for a stay pending appeal and reaffirmed this Court’s continuing jurisdiction. Holden v. Heckler, No. 85-3128 (6th Cir. Feb. 15, 1985) (Jones, J.). The Secretary then dismissed her appeal. She did, however, move to dismiss this action based on an alleged lack of district court jurisdiction. In light of the clear appellate decisions, on May 9, 1985 this Court denied her motion, granted the plaintiffs’ motion for summary judgment, and entered a final remedial order. Holden v. Heckler, 615 F.Supp. 684, 683-684, (N.D. Ohio 1985).

III.

The Court now examines in detail the Secretary’s arguments that the position of the United States was “substantially justified.”

A.

Much of the Brief of Defendant in Opposition to Plaintiff’s Application for Attorneys’ Fees (“Government Brief”) deals with jurisdictional issues. Her first set of arguments concerns her objections to this Court’s jurisdiction over a class action under 42 U.S.C. § 405(g):

The government in the instant case submitted three “major” briefs to the Court. In her Memorandum in Opposition to the Plaintiffs’ Joint Motion for Class Certification (filed March 9, 1984), Memorandum in Opposition to Plaintiffs’ Application for a Preliminary Injunction (filed June 28, 1984), and her Motion for Stay (filed May 9, 1984), the Secretary raised arguments contesting whether the Court had jurisdiction over the claims of many members of the classes eventually certified by the Court on April 30, 1984. The Court initially ruled against the Secretary’s jurisdictional arguments, but after decisions were announced by the Supreme Court in Heckler v. Lopez, — U.S. —, 104 S.Ct. 2164 [80 L.Ed.2d 548] (1984) (Court’s refusal to vacate stay entered by Justice Rhenquist [sic]), Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013 [80 L.Ed.2d 622] (1984), and Heckler v. Day, 467 U.S. 104, 104 S.Ct. 2249 [81 L.Ed.2d 88] (1984), the Court, on May 29, 1984, issued an Order staying implementation of the April 30 Order as to a part of the class certified on April 30. This decision was based upon the same jurisdictional arguments which the Secretary had been raising since the beginning of the litigation. The only difference was that the Secretary was now able to point to the Supreme Court’s refusal to vacate Justice Rhenquist’s [sic] stay as judicial authority for arguments originally based upon the language of the statutes in question. In deciding the question of the award of EAJA fees, the Court cannot overlook its own grant of a stay, or that the Supreme Court has issued a stay in a similar case, when the Court comes to determine whether the litigation position was “substantially justified,” Dubose v. Pierce, 761 F.2d 913, 919-20 (2d Cir. 1985). Nor should the Court overlook the fact that although classes of plaintiffs fared well in their respective district courts when challenging the medical improvement standard, appellate courts have, in many cases, reerected the jurisdictional walls knocked down by those district courts.

Government Brief at 3-5 (footnote omitted).

None of these arguments is persuasive. First, the overwhelming majority of the Secretary’s myriad jurisdictional arguments under § 405(g) were unjustified at the time they were made and have remained unjustified throughout this entire action. Reviewing once more the presentation, exhaustion, and sixty-day requirements indicates first that the Secretary’s argument on presentation possessed no reasonable basis in Weinberger v. Salfi or Mathews v. Eldridge and contradicted the views of every court which had addressed the issue in the medical improvement context. The same is true for the exhaustion requirement. Nothing in Lopez, Ringer, or Day vindicated her position in any way. Holden v. Heckler, 584 F.Supp. at 498-99. With respect to the sixty-day requirement, the Secretary confuses the Supreme Court’s April 30, 1984 opinion in Heckler v. Lopez, — U.S. —, 104 S.Ct. 2164, 80 L.Ed.2d 548 (1984) (granting in part and denying in part the Secretary’s application for stay of Ninth Circuit decision pending filing and final disposition of petition for writ of certiorari), with the October 11, 1983 opinion, 464 U.S. 879, 104 S.Ct. 221, 78 L.Ed.2d 217 (1983) (denying motion to Vacate stay previously entered by Circuit Justice Rehnquist, 463 U.S. 1328, 104 S.Ct. 10, 77 L.Ed.2d 1431 (1983)). The three Lopez opinions are discussed in detail in the opinion granting a partial stay of the injunction pending appeal, Holden, 584 F.Supp. at 500-01, and need not be interpreted again here. It is sufficient to note that, based on the April 30, 1984 order in Lopez, this Court entered (and later vacated) a partial stay of its preliminary injunction with respect to one portion of the class. Neither the Supreme Court nor the Sixth Circuit has ever issued a substantive ruling sustaining the Secretary’s position on the sixty-day rule, and the weight of the circuit court opinions is against her. Johnson v. Heckler, 769 F.2d 1202, 1208 (7th Cir.1985) (and Second, Seventh, Eighth and Ninth Circuit cases cited therein). Moreover, a summary order such as the partial stay entered in Lopez is not to be construed as a substantive ruling changing previous case law. Mandel v. Bradley, 432 U.S. 173, 97 S.Ct. 2238, 53 L.Ed.2d 199 (1977).

Nonetheless, assuming arguendo that the Lopez decision demonstrates that the Secretary’s position on the sixty-day rule was non-frivolous with respect to one portion of the class, that alone does not demonstrate that her overall position on jurisdiction was substantially justified. This Court believes that it was not. Further, it agrees with the cases cited by plaintiffs holding that a plaintiff’s failure to prevail on one small issue does not defeat an EAJA fee application. In Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), the Court promulgated guidelines for assessing fee applications under 42 U.S.C. § 1988, and wrote:

Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee. Normally this will encompass all hours reasonably expended on the litigation, and indeed in some cases of exceptional success an enhanced award may be justified. In these circumstances the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit.... Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court’s rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters.

Id. at 435, 103 S.Ct. at 1940 (citation and footnote omitted). Lower courts have appropriately adopted this principle in EAJA cases. Citizens Council of Delaware County v. Brinegar, 741 F.2d 584 (3d Cir. 1984); American Academy of Pediatrics v. Heckler, 580 F.Supp. 436 (D.D.C.1980). In short, the government’s success concerning one small part of its jurisdictional argument does not render either the Secretary’s underlying position or the government’s overall litigating position substantially justified.

The second portion of the Secretary’s jurisdictional argument is that “appellate courts have, in many cases, re-erected the jurisdictional walls knocked down by those district courts.” This statement is grossly misleading. The Secretary relies upon cases in which medical improvement class actions were remanded to district courts for further proceedings in light of the 1984 Act. Hyatt v. Heckler, 757 F.2d 1455 (4th Cir.1985); Pulaski v. Heckler, 751 F.2d 943 (8th Cir.1984). These cases did not “re-erect jurisdictional walls” such as those “knocked down” by this Court. Rather, they remanded two class actions to the Secretary for further proceedings under the Act—a statute which explicitly codified the medical improvement standard articulated and enforced by this and other courts, and which did not vindicate any of the Secretary’s original, unfounded jurisdictional arguments. Remands pursuant to the Act are simply irrelevant to the propriety of the contentions propounded by the Secretary months before the statute was passed by Congress and signed into law by the President. Nor is the summary, per curiam stay issued on July 1, 1985 in Heckler v. City of New York, — U.S. —, 105 S.Ct. 3552, 87 L.Ed.2d 671 (1985) (partial stay of court of appeals judgment, 742 F.2d 729 (2d Cir.1984), pending filing and disposition of writ of certiorari), at all probative. Arguments that these cases somehow retroactively render the Secretary’s position throughout this litigation substantially justified flirt with the boundaries of Fed.R.Civ.P. 11.

B.

The remainder of the Secretary’s “substantial justification” argument concerns her position on the medical improvement standard itself:

The vast majority of time devoted to the “merits” of the case (the medical improvement standard itself) by the government was spent defending the Secretary’s right to promulgate regulations and attempting to convince the Court that the Secretary was not “non-acquiescing” in Sixth Circuit law alleged to be settled since Hayes v. Secretary of Health, Education and Welfare, 656 F.2d 204 (6th Cir.1981). Regardless of the fact that the Court adopted neither of these arguments, it cannot be said that there was no substantial justification for making each of them.
The Sixth Circuit Court of Appeals has recently written in its Trident Marine opinion:
At trial, the government argued that SBA’s interpretation of its own regulation was entitled to deference and that the Court should not substitute its judgment on the sufficiency of the protest for the SBA’s judgment. Although the district court did not accept the government’s claim, we agree with the district court that this is a substantial argument to justify the government’s position. The law is well settled that federal courts should accord great deference to an agency’s interpretation of its own regulations. Based on ... precedent the government had a strong argument that Zenith’s protest was sufficient.
Trident Marine, supra, at 981 (citations omitted).
It does not seem, then, that the government’s litigation position seeking recognition of the Secretary’s right to promulgate regulations can be seen as anything less than substantially justified.
Nor can the government be taken to task for not “caving-in” to a grant of relief to a statewide class based upon Hayes. The government still disputes whether Hayes supported the various propositions of law for which it was advanced, but even it it did support those legal conclusions, the government is entitled to re-litigate those questions without automatically running afoul of the EAJA substantial justification standard.
At issue in Wyandotte Savings Bank v. NLRB, 682 F.2d 119 (6th Cir.1982), was an application for EAJA fees made on behalf of a party who had prevailed in litigation against the NLRB. The Court of Appeals, ruling on the merits of the litigation, had determined that its own opinion in another case was controlling, and held adversely to the government. On the question of fees, the Court found:
The mere fact that the NLRB was the losing party or the fact that the NLRB’s position was contrary to prior Sixth Circuit precedent does not mean that the Board was not substantially justified in seeking enforcement of its order. Wyandotte Savings Bank, supra, 682 F.2d at 120.
In light of the foregoing, the government’s position was substantially justified. Plaintiffs’ counsel are therefore not entitled to fees and other expenses under 28 U.S.C. § 2412(d).

Government Brief at 5-6.

This Court once again deals with the Secretary’s arguments one-by-one, beginning with her strange contention that her refusal to apply the medical improvement standard articulated in Hayes was not “non-acquiescence” in defiance of Sixth Circuit law. In her brief submitted following the preliminary injunction hearing in this case, the Secretary explicitly and unequivocally asserted her right to refuse to apply Sixth Circuit rulings to other cases involving identical questions of law: “But since those are different claims asserted by different parties, res judicata does not compel the Secretary to follow the results obtained in those cases.” Post-Hearing Brief at 27 (quoted in Holden, 584 F.Supp. at 490). This is the essence of “non-acquiescence.” As previously stated, 584 F.Supp. at 490, the Secretary’s argument was, and is, utterly meritless. There was no substantial justification for the agency’s position that it could ignore pronouncements of the Sixth Circuit and no substantial justification for the litigating position defending its right to do so.

Furthermore, this was not a case challenging “the Secretary’s right to promulgate regulations.” Nowhere in any of their pleadings did the plaintiffs assert such a position, which would, of course, contradict fundamental principles of modern administrative law. They merely challenged the Secretary’s absurd claim that her interpretations of Social Security statutes took precedence over the decisions of federal district and circuit courts. See id. at 474-75. Once again, there was no substantial justification for the agency’s substantive position or its litigation stance.

Finally, the Secretary submits that “the government is entitled to re-litigate [previously-decided issues] without automatically running afoul of the EAJA substantial justification standard.” This is true but not germane. Wyandotte Savings Bank v. NLRB did hold that “[t]he mere fact that the NLRB was the losing party or the fact that the NLRB’s position was contrary to prior Sixth Circuit precedent does not mean that the Board was not substantially justified in seeking enforcement of its order.” Id. at 120. In Wyandotte, however, the NLRB issued an order to bargain and sought Sixth Circuit enforcement in a test case intended to seek reversal of a prior Sixth Circuit ruling. The Board’s position was consistent with that of two other circuits and had the support of two Sixth Circuit judges. Ultimately, the NLRB did not prevail, but in rejecting the prevailing party’s application for EAJA fees the court held “that the position taken by the Board was a reasonable attempt to reopen a closed question.” Id. Here, by contrast, the Secretary did not make any attempt to reopen the question decided in Hayes and the other medical improvement cases. Instead, she simply refused to heed precedent, and left it to the individual litigants in social security cases—and ultimately to the class in this case—to force her to obey the law. The comparison to Wyandotte, a legitimate test case, is therefore inapposite. Rather, the appropriate comparison is to Kitchen Fresh and Beverly Enterprises, cases in which the Sixth Circuit vigorously refuted an agency’s position that it could ignore appellate precedent without challenging that precedent in a test case. See Holden, 584 F.Supp. at 490-91. This Court again concludes that neither the agency position nor the litigating position was substantially justified.

IV.

Under the standards enunciated in the EAJA Amendments, and even under the “mere reasonableness” standard previously utilized by the Sixth Circuit, the Secretary’s actions giving rise to this lawsuit and her litigating position throughout it have not been substantially justified. Accordingly, attorneys’ fees, costs and expenses under EAJA will be awarded. The government may conduct limited discovery with respect to the amounts sought and shall submit its supplemental response to plaintiffs’ application within thirty (30) days of this memorandum and order.

IT IS SO ORDERED.

      . This opinion deals only with the threshold question of whether any fees should be awarded. The Secretary also challenges the amount of fees—$212,791.28—sought by plaintiffs’ counsel, the Legal Aid Society of Cleveland and the law firm of Kelley, McCann & Livingstone. By agreement of the parties, adjudication of the amount of fees to be awarded has been deferred pending issuance of this ruling and subsequent discovery and pleading.

      . Pub.L. 96-481, Title II, § 204(c), 94 Stat. 2327 provided that portions of the EAJA expired effective October 1, 1984, although fees remained available for all cases commenced prior to that date. The Equal Access to Justice Act Amendments, Pub.L. 99-80, amending the EAJA provisions codified at 5 U.S.C. § 504 and 28 U.S.C. § 2412, were signed by the President on August 5, 1985. They make permanent those provisions of the statute which were originally enacted as a three-year experiment, and apply to all cases pending on the date of their enactment and all cases filed on or after October 1, 1984.

      . Hayes has been cited by other courts as the Sixth Circuit’s rule of law adopting the medical improvement standard. See Kuzmin v. Schweiker, 714 F.2d at [1233] 1238 [ (3rd Cir. 1983) ]; Trujillo v. Heckler, 569 F.Supp. [631] at 634 [ (D.Colo.1983) ]; Siedlecki v. Schweiker, 563 F.Supp. 43, 47 (W.D.Wash.1983).

      . This Court wishes to emphasize that it intends no criticism of the United States Attorney for the Northern District of Ohio or the Assistant United States Attorneys who represented the Secretary in this action. The lengthy proceedings demonstrated repeatedly that the Secretary's litigating position was formulated primarily by Social Security officials and counsel in Baltimore and Washington and by attorneys in the Civil Division of the Justice Department. Local counsel who carried out the orders of their superiors and the mandates of their agency client consistent with their professional duty under Canon 7 of the Model Code of Prof essional Responsibility did not thereby acquire responsibility for the untenable positions they were forced to advocate.


source: Caselaw Access Project

author: OBERDORFER, District Judge.

license: Public Domain

text:
    Inderjit BADHWAR, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF the AIR FORCE, et al., Defendants.
    Civ. A. No. 84-0154.
    United States District Court, District of Columbia.
    March 6, 1985.

      Isaac N. Groner, Raymond D. Attocchi, Judith E. dingy, Steven F. Korostoff, Cole & Groner, P.C., Washington, D.C., for plaintiffs.
    Richard K. Willard, Acting Asst. Atty. Gen., Joseph E. DiGenova, U.S. Atty., Barbara Gordon, Catherine J. Lanctot, Attys., Dept. of Justice, Civ. Div., Washington, D.C., for defendants.
   MEMORANDUM

OBERDORFER, District Judge.

I.

Plaintiffs are investigative reporters interested in learning and writing about the military’s air accident investigation program and action taken pursuant to that program. Defendants are the Departments of the Army, Air Force and Navy, under whose authority these investigations are conducted. The plaintiffs seek three different types of documents from each of the defendants: (1) accident reports relating to particular incidents; (2) all recommendations in accident reports since 1950; and (3) Annual Accident Safety Reports for specified years. Defendants claim that evidence and reports of military air crashes are exempt from disclosure pursuant to Exemption 5 of the Freedom of Information Act, 5 U.S.C. § 552(b)(5). They also defend the Air Force's refusal to waive the fee chargeable to those who request documents under FOIA. 5 U.S.C. § 552(a)(4)(A).

II.

The documents that have been withheld by the defendants consist of various portions of so-called “safety reports.” Each Department prepares two types of accident reports: one type, known as the safety report, is kept secret; the other type, known as the collateral report, is normally released.

Each safety report is the work of a board appointed to investigate an accident. To induce witness candor, regulations authorize, if not require, each board to promise that witness statements will be received and kept in confidence. The Navy and the Air Force, and to a lesser extent the Army, routinely promise confidentiality to witnesses. Exceptions are made where, for example, the Jencks Act requires production of a witness statement to a person charged with a crime in connection with an accident, or where Congress requests access to the statements, as well as where the regulations are not strictly honored. Thus, in some instances statements have been taken with a specific pledge of confidentiality. Some statements have been made available to unauthorized readers.

A safety report typically includes witness statements, other documentary and photographic evidence, findings, conclusions and recommendations. When a safety board completes a report, it is forwarded to the appointing authority for distribution to those responsible for taking any corrective action recommended by the board. A safety board does not take action itself; its end product is typically a recommendation. Compare Defendants’ Statement of Material Facts No. 18 & No. 27 with Plaintiffs’ Response to Defendants’ Statement of Material Facts No. 27.

The authority that creates the safety board also commissions a “collateral investigation.” The collateral investigators prepare an account of the accident and a collection of evidence for use in disciplinary proceedings, civil litigation, and for all other purposes other than accident prevention and aviation safety. The collateral investigation is conducted by personnel not involved in the safety investigation. These investigators have access to the evidence and witnesses presented to the safety board. In addition, the collateral investigators put witnesses under oath and give them no pledge of confidentiality. The collateral report is, in effect, a version of the safety report, expurgated for public consumption. See Defendants’ Statement of Material Facts No. 19.

Plaintiffs contrast the openness of civilian aircraft accident investigations conducted by the National Transportation Safety Board (NTSB) and the relative success of civilian authorities in reducing the civilian aircraft accident rates, with the relatively high rate of accidents involving military aircraft where secrecy is the theme. To confirm their hypothesis that the military policy of secrecy with respect to accident investigation has been counterproductive, plaintiffs seek disclosure of about 17 specific safety reports, as well as some reports about unspecified, similar accidents and all other documents generated since 1950 which reflect safety recommendations.

The parties have filed cross-motions for summary judgment in response to the Court’s suggestion that they focus the issues in the context of a discrete sample of documents. These motions frame as an issue the defendants’ obligation to produce in full three specific safety board reports, one from each defendant, together with the findings, conclusions, recommendations sections, and witness statements from the report about the C-5A crash near Saigon on April 4, 1975. Plaintiffs also request the Court to require defendants to segregate and disclose factual statements in documents that are found to be generally exempt. Finally, plaintiffs challenge as arbitrary and capricious defendants’ decision not to waive document production fees. Defendants take the position that the public interest is not served by the inquiry of these investigative reporters into the effectiveness of the defendants’ policy of imposing secrecy on military aircraft accident safety reports.

III.

A.

Plaintiffs’ core request is for the witness statements furnished to the safety boards. Recognizing that a recent Supreme Court decision bars disclosure of statements by witnesses who have given them in confidence, plaintiffs claim that defendants have failed to carry their burden of proving that the defendants gave such a specific pledge to each witness who gave a statement. See United States v. Weber Aircraft Corp., 465 U.S. 792, 104 S.Ct. 1488, 79 L.Ed.2d 814 (1984).

There is apparent agreement between the parties that the Army is sparing in its pledges of confidentiality and that as a corollary the Army has released substantially more witness statements than have the Air Force and the Navy. Defendants further point out that Air Force and Navy regulations require that such assurances be given to all witnesses appearing before safety boards and that therefore there is a presumption of regularity that these regulations are honored by the Departments which issued them. The regulations and this presumption establish that witness statements would not be routinely discoverable.

Plaintiffs cite incidents where witness statements are in fact disclosed. For example, such statements are produced for criminal defendants in response to Jencks Act requests.. Persons who contributed causally to an accident are furnished access to the entire safety report, presumably including witness statements, albeit under protective procedures. Some witnesses do not recall being given a specific pledge of confidence. And, of course, Congress has access to the safety reports. However, none of these incidental deviations from the course of conduct required by the regulations justifies a different conclusion with respect to release of individual witness statements. “The test under Exemption 5 is whether the documents would be ‘routinely’ or ‘normally’ disclosed upon a showing of relevance.” United States v. Weber Aircraft Corp., supra, at 1493 (quoting FTC v. Grolier, Inc., 462 U.S. 19, 103 S.Ct. 2209, 2214, 76 L.Ed.2d 387 (1983)). The regulations, the apparent practice, and the rather common knowledge of it, satisfy the defendants’ burden under the doctrine of United States v. Weber Aircraft Corp., supra, and Machín v. Zuckert, 316 F.2d 336 (D.C.Cir.), cert. denied, 375 U.S. 896, 84 S.Ct. 172, 11 L.Ed.2d 124 (1963), which establish that witness statements are not routinely discoverable. Accordingly, the witness statements sought by plaintiffs are exempt from disclosure. To hold otherwise would be to risk stifling witness cooperation in the future, since the prospect that a court would have the final say as to whether a guarantee of confidentiality had actually been given would reduce the reliability of such pledges. See United States v. Weber, supra, 104 S.Ct. at 1495 n. 23; Cooper v. Department of the Navy, supra, at 277; Brockway v. United States Air Force, 518 F.2d 1184, 1193-94 (8th Cir. 1975); see also Larson Declaration at U 14; Breast Affidavit (June 13, 1984) at 1110.

B.

Plaintiffs also request the findings, conclusions and recommendations of the safety boards, essentially on the theory that these are the final actions of the safety boards and, therefore, final agency action. Defendants respond that these findings, conclusions and recommendations are not final agency actions because safety boards do not take final agency action. According to defendants, those who appoint the safety boards and receive their reports make the decisions about what action the department takes on the basis of the findings, conclusions and recommendations of the safety boards. Defendants maintain that the give and take that characterizes the safety investigation is inherently deliberative and that the safety reports are, by definition and by necessity, predecisional. See Coastal States Gas Corp. v. Department of Energy, 617 F.2d 854, 866 (D.C.Cir.1980). Plaintiffs’ riposte is that if the safety boards’ findings, conclusions and recommendations with respect to the particular accident here at issue are predecisional, then plaintiffs are entitled to “the findings of the ultimate decisionmaker, whoever that is.” Plaintiffs’ Memorandum on Count I at 14. Plaintiffs do not dispute that the safety investigation is deliberative.

Considering the work of the safety boards and the administrative context in which they function, defendants have established and plaintiffs concede that the safety boards merely propose; others dispose. See McGlade Declaration at ¶¶ 11, 21 & 40. Thus, those who act on the findings, conclusions and recommendations of the safety boards “have discretion to follow the opinions [of the safety boards] or not, based on their persuasive value rather than their character as working law____” Brin ton v. Department of State, 636 F.2d 600, 605 (D.C.Cir.1980), cert. denied, 452 U.S. 905, 101 S.Ct. 3030, 69 L.Ed.2d 405 (1981); see also Murphy v. Department of the Army, supra, at 1154 n. 9; American Federation of Government Employees v. Department of the Army, 441 F.Supp. 1308, 1313 (D.D.C.1977).

This case is analogous to Renegotation Board v. Grumman Aircraft Engineering Corp., 421 U.S. 168, 95 S.Ct. 1491, 44 L.Ed.2d 57 (1975). The plaintiff in that case sought documents generated by Regional Boards and by individual members of the Renegotation Board itself. The Court observed that the Regional Boards and individual board members could, like the safety boards in this action, merely recommend conclusions for acceptance or rejection and then held that the reports of those recommendations were properly withheld as deliberative documents. Id. at 184-91, 95 S.Ct. at 1500-04. This case differs from Renegotiation Board only because here the defendants have not identified a particular final decisionmaker; that distinction does not, however, make the safety boards’ deliberations any less “predecisional.” Thus, “the agency’s decisionmaking mechanisms and the documents’ significance within that structure," Murphy v. Tennessee Valley Authority, 571 F.Supp. 502, 505 (D.D.C.1983), establish that, in the large, the safety board findings, conclusions and recommendations are deliberative, predecisional, and exempt from disclosure under Exemption 5. See Weber Aircraft Corp. v. United States, 688 F.2d 638, 644 (9th Cir.1983), rev’d on other grounds, 465 U.S. 792, 104 S.Ct. 1488, 79 L.Ed.2d 814 (1984).

Normally, in controversies like this, a large disclosure issue would remain with respect to particular facts stated in the reports. It is well-established that an agency resisting disclosure of an entire document or category of documents remains obligated to segregate factual portions, disclosure of which would not be barred. 5 U.S.C. § 552(b); see also Mead Data Central, Inc. v. Department of the Air Force, 566 F.2d 242, 260 (D.C.Cir.1977). The Army and the Air Force have already segregated and disclosed facts stated in the safety board reports, both in collateral reports and supplemented excerpts. See Larson Declaration at ¶ 19; Ivey Declaration (June 13, 1984) at ¶¶ 8-9; Ivey Declaration (November 14, 1984) at ¶¶ 2-3; Crawford Declaration (November 16, 1984) at ¶¶ 2-3.

The Navy argues that the facts which are segregable from the safety reports are available in the collateral report that it furnishes. The Navy has also filed an externally plausible affidavit that the collateral reports contain all material facts about the several accidents. Breast Declaration (June 13, 1984) at ¶ 22. But that is the Navy’s version of what is material and it is unclear what criteria of materiality it applied. Counsel for the defendants has also stated on behalf of the Navy:

As a policy matter, the Navy will not turn over any material in the [safety reports] which reflects the deliberative process____

Defendants’ Reply on Count I at 23. Moreover, the Navy takes the position that “rational segregation” of the material in its safety report is not “possible.” Defendants’ Memorandum on Count I at 23; see also Breast Declaration (June 13, 1984) at ¶ 9. According to counsel:

Many of the factual matters contained in a safety report reflect a choice by accident investigators to pursue or abandon a line of inquiry, and their inclusion or exclusion in the safety report could reflect the mental processes of the safety board in determining the cause of accident.

Defendants’ Reply at 23-24. The Navy relies heavily on the Fifth Circuit’s decision in Cooper v. Department of the Navy, supra. These generalities are not sufficient to carry the defendants’ burden.

To resolve this issue, the Court will require the Navy to file, by a date certain, a detailed justification for the application of Exemption 5 to the safety report that is the subject of these cross motions. See Mead Data Central, Inc., supra, at 260-62; Pacific Architects and Engineers, Inc. v. Renegotiation Board, 505 F.2d 383, 385 (D.C. Cir.1974). In addition, an order accompanying this memorandum will schedule a conference to which the Navy will bring copies of the relevant safety report and the collateral report. Before the conference, the Navy will mark by underlining in color on the copy of the safety report each factual statement which does not appear in the collateral report, and underline in another color each such factual statement the disclosure of which would compromise the deliberative process. At that conference, the Court will determine whether in camera comparison of these documents is indicated and, if so, excuse plaintiffs’ counsel from the conference so that such an in camera examination can proceed. See Mead Data Central, Inc., supra, at 262 n. 59.

C.

The parties have narrowed their differences about autopsy reports and related documents. Plaintiffs do not now seek medical or personal information, and have indicated that they will withdraw their request if defendants review each document involved and then represent that the documents contain only personal information. Plaintiffs do, however, seek any information in those reports relating to the cause of the accident or to safety. Defendants resist on the theory that any statement in the autopsy reports revealing such information would run afoul of Exemption 5’s protection of deliberative material. Defendants do not suggest that the information obtained for the autopsy reports was obtained under any pledge of confidentiality and it is not immediately apparent how information in an autopsy report about the cause of the accident or about safety considerations is deliberative.

An accompanying order will require the defendants to prepare a detailed justification for the application of Exemption 5 to the autopsy reports and related documents that are the subject of these cross motions, or to file a statement of the kind that plaintiffs have represented will lead them to withdraw their request. Before the conference to be scheduled, the defendants should mark copies of the autopsy reports to identify material relating to the cause of the accident and safety information which is claimed to be deliberative; the marked copies should be brought to the conference, where the Court will determine if in camera review is in order.

D.

The Air Force seeks protection of technical reports and engineering evaluations furnished to safety boards by aircraft manufacturers, claiming that these reports are “commercial,” and thus protected by Exemption 4. The Air Force also claims that such documents may be withheld under Exemption 5’s deliberative process privilege. According to defendants, release of these reports would impair the government’s ability to obtain necessary information in the future and would competitively disadvantage the manufacturers involved.

Under Exemption 4, information need not be disclosed if it is (1) commercial or financial; (2) obtained from a person; and (3) privileged or confidential. Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1290-91 (D.C.Cir.1983). There is no dispute that the information that the plaintiffs seek to obtain was submitted by a “person.” Thus, the threshold inquiry is whether these technical and engineering evaluations would reveal “commercial or financial” information. When the term “commercial” is given its ordinary meaning, see Washington Post Co. v. United States Department of Health and Human Services, 690 F.2d 252, 266 (D.C.Cir.1982), it applies to the documents at issue here. A manufacturer’s candid assessment of the performance of its product may well affect its ability to market that product.

There remains a dispute as to whether the technical reports are confidential. Commercial information is confidential under Exemption 4 “if disclosure is likely ‘(1) to impair the Government’s ability to obtain necessary information in the future; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained.’ ” Washington Post Co., supra, at 269 (quoting National Parks & Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir.1974) (footnote omitted)). It is not clear that disclosure of a highly specific technical document would implicate either of these concerns. See Battocchi Declaration, Exhibit 6. Nevertheless, the Air Force’s General Larson asserts in his declaration that contractors are induced to provide such technical reports by promises of confidentiality and that “[r]elease of this type of information outside of the defined flight safety channels would effecively ‘dry up’ one of the most productive sources of information we have for preventing future accidents ____” Larson Declaration at If 15. In contrast, Francis McGlade, former Director of Safety for the Army, declares that promises of confidentiality are not needed to obtain the information contained in the technical reports. McGlade Declaration at MI 34-36. Regardless of whether Mr. McGlade has personal knowledge of the Air Force’s need for confidentiality, it is clear that General Larson’s conclusory assertion of confidentiality is “unacceptable and cannot support [the Air Force’s] decision to withhold requested documents.” Public Citizen Health Research Group v. FDA, supra, at 1291. The insufficiency of the evidence on this point does not, however, mean that the Air Force will never be able to establish its Exemption 4 claim. See Washington Post Co., supra, at 269. To resolve this issue, the Court will require the defendants to submit, by a date certain, a detailed justification that will permit the Court to determine whether the test for confidentiality under Exemption 4 has been satisfied. See id.; Pacific Architects & Engineers, Inc., supra, at 385.

The defendants also claim a deliberative process privilege for the reports. The conclusory statements supporting this proposition do not reveal why non-deliberative statements cannot be segregated from the assertedly deliberative elements. Therefore, the defendants should include with their Exemption 4 justification a detailed explanation of the extent to which Exemption 5 applies to these reports. In addition, at the conference to be scheduled in an accompanying order, the defendants should be prepared to present to the Court the technical reports that are the subject of the cross motions. The portions which are supposedly covered by Exemption 4 should be marked in one color ink, while parts to which Exemption 5 allegedly applies should be marked in another. If in camera inspection is indicated, the Court will excuse plaintiffs counsel from the conference.

E.

Several other issues presented by the redacted cross motions can be disposed of briefly. Plaintiffs claim that the defendants must release documents reflecting safety information that 49 U.S.C. § 1442(c) requires the military to provide to the Administrator of the Federal Aviation Administration and the NTSB. However, 49 U.S.C. § 1905(a), which concerns public access to information received by the NTSB, specifically states that “[n]othing contained in this section shall be deemed to require the release of any information described by subsection (b) of section 552 of Title 5 [the FOIA exemptions]____” Accordingly, transmittal of military safety information to the NTSB does not render the affected materials disclosable.

Plaintiffs also seek the accident reports made available to the litigants in Machín v. Zuckert, supra. The defendants represent that the Air Force will release these documents when the plaintiffs pay the required fees. Since the Court concludes below that the Air Force abused its discretion in failing to waive these fees for the plaintiffs, there is no barrier to production of these documents.

The defendants have released a number of documents that were originally marked with the words “For Official Use Only” (FOUO). See Larson Declaration at 1119. The defendants claim that the stamp is an internal administrative marking and that Exemption 2 permits the Air Force to remove such markings before releasing the affected documents. Exemption 2 applies to documents “related solely to the internal personnel rules and practices of an agency.” 5 U.S.C. § 552(b)(2). The FOUO stamp indicates how particular documents should be handled and is therefore “designed to establish rules and practices for agency personnel.” Crooker v. Bureau of Alcohol, Tobacco and Firearms, 670 F.2d 1051, 1073 (D.C.Cir.1981) (en banc). The stamp is also “predominantly internal” since it is not a source of “secret law” that has the effect of regulating public behavior. Id. at 1075. The defendants have not suggested, by affidavit or otherwise, that disclosure of the FOUO stamp “significantly risks circumvention of agency regulations or statutes.” Crooker, supra, at 1074. Compare Allen v. CIA, 636 F.2d 1287 at 1290 n. 20 (“Disclosure of filing and routing instructions, of course, would not cause such ‘circumvention of agency regulations.’ ”). However, the plaintiffs have not explained why the public has an interest in seeing these apparently trivial administrative markings, particularly where the defendants’ affidavit identifies the documents from which the stamps have been removed. In the absence of a showing of legitimate public interest, the FOUO markings need not be disclosed. See Founding Church of Scientology of Washington, D.C. v. Smith, 721 F.2d 828, 830 n. 4 (D.C.Cir.1983).

Finally, defendants have not responded to plaintiffs' arguments that an agency cannot withhold admittedly public documents—in this case, the material that the Fifth Circuit Court of Appeals ordered disclosed in its modification of Cooper v. Department of the Navy, supra. There appears to be no reason to withhold material that has been placed in the public record during the course of litigation. The defendants are required to disclose the publicly available documents sought by plaintiffs.

IV.

The Air Force and the Army have claimed no exemption for many documents sought by plaintiffs, and have expressed their willingness to make them available. The Air Force has conditioned its disclosure of these documents upon payment of the fee generally charged by government agencies for producing copies of documents requested on authority of FOIA. Plaintiffs have declined to pay the fee. They invoke a provision of FOIA which provides:

Documents shall be furnished without charge or at a reduced charge where the agency determines that waiver or reduction of the fee is in the public interest because furnishing the information can be considered as primarily benefiting the general public.

5 U.S.C. § 552(a)(4)(A).

The Air Force regulation pertinent to fee waivers states that:

(a) The Air Force supports the principle that the general public should have reasonable access to records. Fees must not be used to discourage requests.
* * * * * * *
(d) The decision to waive or reduce fees that are more than $30 must be made on a case-by-case basis, by the FOIA manager. As a general guide, fees are usually waived when any of these circumstances are met:
* * * * * * *
(6) The request is from a member of the news media, whose requests are reasonable in scope and frequency. But, news media requesters may be charged fees when:
(i) Charges exeed $30;
(ii) Either the requested record doesn’t contain information considered as primarily benefiting the general public, or the search for the record requires an excess amount of personnel time and adversely impacts on an organization’s mission.

32 C.F.R. § 806.11.

Plaintiffs ask the Court to make de novo determinations that they are entitled to a waiver because a waiver would be in the public interest, and that furnishing to them the information they seek primarily benefits the public interest. In addition, plaintiffs seek a declaratory judgment that a Justice Department memorandum issued on January 7, 1983, and relied upon by defendants here in deciding whether to waive fees, is a de facto regulation published without compliance with the notice and comment requirement of the Administrative Procedure Act and is contrary to the requirements of FOIA.

Plaintiffs contend that review of the fee determination is governed by 5 U.S.C. § 552(a)(4)(B), which puts the burden of proof on defendants, rather than by the arbitrary and capricious test established by the Administrative Procedure Act, 5 U.S.C. § 703. They recognize, however, that district court decisions in this circuit apply an arbitrary and capricious standard of judicial review, see, e.g., Eudey v. Central Intelligence Agency, 478 F.Supp. 1175, 1177 (D.D.C.1979), and contend that even applying that standard the fees should have been waived.

In support of their claim for a waiver, plaintiffs point to the facts that they are journalists on the staff of Jack Anderson, and contribute to his widely published column. They have established their credentials and their bona fides by authoring and publishing several investigative articles in their own names. They sought the documents at issue in this case in connection with their investigation of safety practices in the military. An affidavit filed with the Court chronicles specific and disturbing instances where testimony about causes of an accident reflecting on military officers did not find its way into the collateral reports about the accident. Plaintiffs further demonstrate without contradiction that their means are limited and that the fee requirement has inhibited their requests for and use of documents that they might otherwise seek in pursuit of their investigation. Although investigative reporting is plaintiffs' occupation and they are gainfully employed, no evidence proffered could establish that they seek these documents primarily for personal gain.

The Air Force has refused to grant a waiver of a fee of $167.10 because it determined that in this case “benefit to the general public would not be the primary result [of waiver] when compared to the private interests of the requester.” Complaint, Exhibit 1(0); see also McCormick Declaration at 11 5. A review of the affidavits and other documents filed by plaintiffs demonstrates that, under any standard of review, this conclusion is untenable. Indeed, the Air Force’s only response is that plaintiffs did not make the demonstration administratively that they have made here. But it is apparent that defendants knew, or should have known, who plaintiffs were, what they wanted, and why. The request identified plaintiff Badhwar as a reporter serving on the staff of Jack Anderson, and explained that he was investigating military safety practices with the intention of reporting on them. See Complaint, Exhibit 1(A).

The public interest in military aviation safety is apparent, as is the segment of the public that will benefit from the release of the documents—those who are interested in aviation news and those whose safety may be enhanced by public consideration of military accident investigation practices. See 32 C.F.R. § 806.11(c)(2). There was no basis when the request was submitted, and none now, for a conclusion that these journalists’ requests were primarily to serve their private interests or that the information they seek is not a matter of public interest. The refusal to waive a fee in this case was an arbitrary and capricious violation of 5 U.S.C. § 552(a)(4)(A) and 32 C.F.R. § 806.11.

The Army still has plaintiffs’ fee waiver under advisement. Plaintiffs contend that they are entitled to a waiver from the Army, just as they have received from the Navy, and just as the accompanying order will mandate for the Air Force. Although the waiver question has been pending since August 1983 (when an Army official asked plaintiffs’ counsel to withdraw the fee request), plaintiffs have not claimed or demonstrated that action on their request has been unreasonably delayed. Compare Telecommunications Research and Action Center v. FCC, 750 F.2d 70, 79-80 (D.C.Cir.1984). It may well be that the Army has delayed, in part, in deference to these court proceedings. Now that the matter has been ventilated here, reciprocal deference between the Judiciary and the Executive requires that the Army be afforded a further brief opportunity to act on its own motion before the Court considers further intervention.

In view of the foregoing, there is no occasion to appraise the Justice Department memorandum of 1983.

ORDER

Upon consideration of the parties’ cross motions for summary judgment and the entire record in this ease, and in accordance with the accompanying memorandum, it is this 6th day of March, 1985, hereby

ORDERED: that the defendants shall file, on or before March 29, 1985: (1) a detailed justification for the application of Exemption 5 to the safety report withheld by the Navy; (2) a detailed justification for the application of Exemption 5 to withheld autopsy and related reports subject to the cross motions before the Court or, alternatively, a statement of the kind plaintiffs have indicated would be acceptable to them on this issue; and (3) a detailed justification for the application of Exemptions 4 and 5 to technical reports and engineering evaluations that are subject to the cross motions before the Court; and it is further

ORDERED: that plaintiffs shall file, on or before April 12, 1985, any response to the detailed justifications filed by defendants; and it is further

ORDERED: that a conference shall be held at 2:00 P.M. on April 19, 1985, to which defendants will bring copies of (1) the Navy’s safety and collateral reports; (2) autopsy reports and related documents; and (3) technical reports and engineering evaluations, color-coded as indicated in the accompanying memorandum; and it is further

ORDERED, ADJUDGED and DECREED: that the defendants shall release to plaintiffs: (1) the accident reports made available to the litigants in Machin v. Zuckert, 316 F.2d 336, 339 (D.C.Cir.), cert. denied, 375 U.S. 896, 84 S.Ct. 172, 11 L.Ed.2d 124 (1963), and (2) requested documents admittedly in the public record; and it is further

ORDERED, ADJUDGED and DECREED: that the following are exempt from disclosure: (1) all withheld safety report witness statements; (2) the withheld findings, conclusions and recommendations of the Army and Air Force safety boards; and (3) “For Official Use. Only” stamps appearing on requested and admittedly releasable documents; and it is further

ORDERED, ADJUDGED and DECREED: that the defendants’ motion for summary judgment on Counts II and III be, and is hereby, DENIED; and it is further

ORDERED, ADJUDGED and DECLARED: that the Air Force’s refusal to waive fees for the plaintiffs was arbitrary, capricious and an abuse of discretion.

      . The cross-motions for summary judgment submitted by the parties were redacted at the suggestion of the Court. They do not address the questions of whether the defendants must produce documents reflecting (1) military accident rates or (2) implementation or rejection of recommendations for corrective action. An accompanying order will set a conference, at which the Court will, among other things, schedule further proceedings on these issues.

      . The Army has released virtually all of its safety reports (including witness statements), except for certain findings, recommendations and conclusions. The Air Force has released less than the Army and has also refused to disclose witness statements. The Navy flatly asserts that its safety reports are exempt from disclosure.

      . See Cooper v. Department of the Navy, 558 F.2d 274, 275-76 (5th Cir.1977), modified on rehearing, 594 F.2d 484 (5th Cir.1974), cert. denied, 444 U.S. 926, 100 S.Ct. 266, 62 L.Ed.2d 183 (1979). The safety reports issued by the Air Force and the Navy are known as Mishaps Investigation Reports. The Army’s safety reports are known as Aircraft Accident Investigation Reports or Mishap Reports.

      . Specifically, the plaintiffs seek the Air Force safety report for the August 5, 1981 crash of an F-16, the Army safety report for the September, 1982 crash of a CH-47 helicopter in Mannheim, West Germany, and the Navy safety report for a 1974 helicopter crash in the Mediterranean Sea near Crete. The Navy report has already been sought unsuccessfully by another plaintiff, and has been held to be exempt from disclosure. See Cooper v. Department of the Navy, supra.

      . Although Congress has reserved to itself the right to receive such reports and may actually have received them, "no waiver occurs of the privileges and exemptions which are available to the executive branch under the FOIA with respect to the public at large.” Murphy v. Department of the Army, 613 F.2d 1151, 1156 (D.C. Cir.1979).

      . Because Exemption 5 applies even assuming that some witnesses do not anticipate that their statements will be held in confidence, there is no reason to permit plaintiffs’ proposed discovery to establish the factual accuracy of that assumption. Plaintiffs’ suggestion that this inquiry would provide a basis for overturning the Machín privilege is also ill-founded. The Supreme Court has explicitly observed that "the Machín privilege ... has been well-settled for some two decades____” United States v. Weber Aircraft Corp., supra, at 1494. Moreover, the Court stated in Weber that "since the Machín privilege is well recognized in the case law as precluding routine disclosure of [witness] statements, the statements are covered by Exemption 5.” Id. at 1493.

      . The mere fact that defendants choose to release collateral reports does not mean that defendants concede the finality of those decisions and, by analogy, the finality of the safety reports. Plaintiffs offer no support for their assertion that "[i]t is beyond dispute that the final reports of the NTSB and the Collateral Boards are not subject to Exemption 5, and are releasable under FOIA." Plaintiffs' Memorandum on Count I at 13. The defendants’ decision to release the collateral reports is entirely consistent with the waiver of an exemption that might otherwise be asserted. Moreover, collateral reports are prepared with the understanding that they will usually be released, and thus do not implicate the confidentiality concerns raised by the deliberative process privilege. Similarly, the fact that the civilian NTSB releases its reports is inapposite—it is required to do so by statute. See 49 U.S.C. § 1901, et seq.

      . Plaintiffs acknowledge that the Army has not withheld such materials, but are not certain whether the Navy has or not.

      . Defendants also suggest that the mere fact that the fee assessed in this case exceeds $30 gives the Air Force absolute discretion to demand payment as a condition to releasing documents. See Defendants’ Reply Memorandum on Counts II and III at 12; 32 C.F.R. § 806.11(d)(6)(i). This interpretation is at odds with 5 U.S.C. § 552(a)(4)(A), which states that "[d]ocuments shall be furnished without charge or at a reduced charge where the agency determines that waiver or reduction of the fee is in the public interest .. “ (emphasis added). The statute limits the ultimate inquiry to the public interest, and does not contemplate the imposition of a monetary threshold beyond which that inquiry may be ignored. At most, the $30 amount fixed in the regulation sets a guideline beyond which the Air Force may demand information sufficient to establish that the request will benefit the general public. See 32 C.F.R. § 806.11(c). That information has been provided here.

      . The Air Force’s original denial of plaintiffs’ fee waiver request did not assert that the information requested was not a matter of public interest, but only that plaintiffs’ private interests outweighed the benefit to the general public. Complaint, Exhibit l(o). That conclusion is untenable, as is the notion that facts and other information pertaining to military aviation accidents are not themselves matters of public interest.

      . In view of this conclusion, it is not necessary to reach the issue of whether reporters are presumptively entitled to fee waivers. The Court holds only that the plaintiffs in this action are entitled to such a waiver.


author: TOM S. LEE, District Judge.

text:
    CITY OF MERIDIAN, Plaintiff, v. ALGERNON BLAIR, INC., et al., Defendants.
    Civ. A. No. E82-0069(L).
    United States District Court, S.D. Mississippi, E.D.
    March 29, 1985.
    See also, 5th Cir., 721 F.2d 525.
    William J. Gunn, Meridian, Miss., Phillips & Mozley, Atlanta, Ga., for plaintiff.
    J.R. Shannon, Meridian, Miss., E. Mabry Rogers & Branton Schell, Birmingham, Ala., for defendants.
   MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of the defendants, Algernon Blair, Inc. and Johnson Controls, Inc., to confirm an award rendered by arbitrators in their favor in the amount of $145,000.00. The motion requests a ruling that the defendants are entitled to be paid interest at the rate of eight percent (8%) per annum on the amount of the award from its date of entry on October 3, 1984, until January 20, 1985, the date of payment of the principal by the City of Meridian. The defendants rely upon the recent Mississippi Supreme Court decision in Pruett v. City of Rosedale, 421 So.2d 1046 (Miss.1982), partially abolishing the doctrine of sovereign immunity, and Mississippi Code Annotated section 75-17-7 (Supp.1984). This statute provides that “All judgments and decrees founded on any contract shall bear interest at the same rate as the contract evidencing the debt on which the judgment or decree was rendered. All other judgments and decrees shall bear interest at the rate of eight percentum (8%) per annum”.

Prior to the Pruett decision, a municipality was clearly not considered to be liable for the payment of interest on a judgment rendered against it. City of Jackson v. Reed, 233 Miss. 280, 305-07, 103 So.2d 6, 7-8 (1958). As stated in that case, interest is a creature of statute for which neither the state nor its political subdivisions are liable unless specifically imposed by statute. Id. 103 So.2d at 7. This principle was recently reaffirmed in City of Mound Bayou v. Roy Collins Const. Co., 457 So.2d 337, 340 (Miss.1984). The court further noted that, derived from the public policy that a political subdivision is not required to respond in judicial proceedings are the rule that statutory damages may not be assessed against a political subdivision where a judgment on appeal is affirmed against the political subdivision and the rule that “a political subdivision is not liable for any interest on a judgment”. 457 So.2d at 340 (citing City of Jackson v. Reed, 233 Miss. 280, 103 So.2d 6 (1958)). The City of Mound Bayou decision clearly restates with approval the rule of law announced in City of Jackson v. Reed, 233 Miss. 280, 103 So.2d 6 (1958). Consequently, the court is of the opinion that the City of Meridian is not liable for payment of interest on the arbitrators’ award.

It is, therefore, ordered that the motion of the defendants is overruled.