In the Matter of Luz Solla, Respondent,v.Elizabeth Berlin, Appellant, et al., Respondents.BriefN.Y.January 15, 2015To be argued by: WON S. SHIN 20 minutes requested Supreme Court, New York County, Index No. 401178/2011 State of New York Court of Appeals In the Matter of the Application of LUZ SOLLA, Petitioner-Respondent, For a Judgment Pursuant to Article 78 of the Civil Practice Law & Rules v. ELIZABETH BERLIN, as Executive Deputy Commissioner of the New York State Office of Temporary and Disability Assistance, Respondent-Appellant, ROBERT DOAR, as Commissioner of the New York City Human Resources Administration, and JACQUELINE DUDLEY, as Deputy Commissioner of the New York City HIV/AIDS Services Administration, Respondents. BRIEF FOR APPELLANT BARBARA D. UNDERWOOD Solicitor General CECELIA C. CHANG Special Counsel WON S. SHIN Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellant 120 Broadway New York, New York 10271 (212) 416-8808 (212) 416-8962 (facsimile) Dated: February 21, 2014 No. APL-2013-00224 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................ iv PRELIMINARY STATEMENT ........................................................ 1 QUESTIONS PRESENTED ............................................................ 4 STATEMENT OF THE CASE ......................................................... 4 A. Relevant Law Concerning Attorney’s Fees ................... 5 1. The “American Rule” against awards of attorney’s fees ......................................................... 5 2. The New York State Equal Access to Justice Act ........................................................................... 6 3. Development of the federal “catalyst theory” ........ 9 4. The U.S. Supreme Court’s Buckhannon decision rejecting the catalyst theory ................... 13 5. New York law regarding the catalyst theory under the New York EAJA ................................... 14 6. Failed attempts to enact the catalyst theory into the New York EAJA ...................................... 17 B. Factual Background and Procedural History.............. 19 1. The City’s delayed compliance with the State’s order to restore petitioner’s benefits ........ 19 2. Proceedings below ................................................. 20 ARGUMENT ................................................................................. 25 ii TABLE OF CONTENTS (cont'd) Page POINT I - THE LEGISLATURE DID NOT INCORPORATE THE FEDERAL CATALYST THEORY INTO THE NEW YORK EQUAL ACCESS TO JUSTICE ACT ................................... 25 A. The Text and History of the New York EAJA Establish that a Party Must Obtain Court-Ordered Relief to Be a “Prevailing Party.” ................................................................. 26 1. The statutory text incorporates the traditional requirement that a prevailing party obtain a favorable judgment or other judicial relief. .................. 28 2. The legislative history confirms that there was no intent for the New York EAJA to depart from the traditional meaning of “prevailing party.” ...................... 35 3. The American Rule and the State’s sovereign immunity require the catalyst theory to be rejected. ..................................... 37 B. The First Department’s Grounds for Adopting the Catalyst Theory Have No Merit. .................................................................. 41 1. The Legislature did not intend C.P.L.R. 8600 to incorporate the federal catalyst theory. ............................................................ 41 iii TABLE OF CONTENTS (cont'd) Page 2. Differences in the scope of the New York EAJA and the federal EAJA do not imply incorporation of the catalyst theory. ............................................................ 47 3. The definition of “final judgment” does not smuggle the federal catalyst theory into the New York EAJA. .............................. 50 4. The catalyst theory is inconsistent with the balance of goals the New York EAJA was designed to achieve. ............................... 52 C. The Legislature Is Best Equipped to Decide Whether the Catalyst Theory is Good Policy. ................................................................. 57 POINT II - THE CATALYST THEORY DOES NOT APPLY WHEN THE LAWSUIT DOES NOT CHANGE THE STATE’S POSITION ..................... 61 CONCLUSION ............................................................................... 68 iv TABLE OF AUTHORITIES Cases Page(s) Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) .......................................................... 5, 39, 40 Ardestani v. INS, 502 U.S. 129 (1991) .............................................................. 38, 39 Baker v. Health Mgmt. Sys., Inc., 98 N.Y.2d 80 (2002) ................................................................... 38 Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (2001) ............................................................ passim Chapel v. Mitchell, 84 N.Y.2d 345 (1994) ....................................................... 5, 31, 39 Citizens Coal. for Block Grant Compliance, Inc. v. City of Euclid, 717 F.2d 964 (6th Cir. 1983) ...................................................... 63 Commonwealth of the N. Mar. I. v. Canadian Imperial Bank of Commerce, 21 N.Y.3d 55 (2013) ................................................................... 31 Cruz v. TD Bank, N.A., 22 N.Y.3d 61 (2013) ............................................................. 34, 50 Diamond v. Diamond, 307 N.Y. 263 (1954) ............................................................... 5, 38 F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116 (1974) .................................................................... 58 FAA v. Cooper, 132 S. Ct. 1441 (2012) ................................................................ 27 v TABLE OF AUTHORITIES (cont’d) Cases Page(s) Farrar v. Hobby, 506 U.S. 103 (1992) .................................................................... 46 Flemming v. Barnwell Nursing Home & Health Facilities, Inc., 15 N.Y.3d 375 (2010) ................................................................. 59 Funk v. Barry, 89 N.Y.2d 364 (1996) ................................................................. 32 Gottlieb v. Kenneth D. Laub & Co., 82 N.Y.2d 457 (1993) ................................................................. 38 Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) ................................................................ 5, 38 Heeren v. City of Jamestown, 39 F.3d 628 (6th Cir. 1994) ........................................................ 63 Idaho Conservation League, Inc. v. Russell, 946 F.2d 717 (9th Cir. 1991) ...................................................... 62 Jones v. Koch, 117 A.D.2d 647 (2d Dep’t), lv. denied, 68 N.Y.2d 608 (1986) ................................................ 33 Long v. Bonnes, 455 U.S. 961 (1982) .................................................................... 13 Ma v. Chertoff, 547 F.3d 342 (2d Cir. 2008) ....................................................... 44 Matter of 2421 Realty Co. v. N.Y. State Div. of Hous. & Cmty. Renewal, 193 A.D.2d 571 (1st Dep’t 1993) ................................................ 39 vi TABLE OF AUTHORITIES (cont’d) Cases Page(s) Matter of A.G. Ship Maint. Corp. v. Lezak, 69 N.Y.2d 1 (1986) ..................................................................... 31 Matter of Auguste v. Hammons, 285 A.D.2d 417 (1st Dep’t 2001) ................................................ 15 Matter of Baker, 284 N.Y. 1 (1940) ....................................................................... 29 Matter of Bello v. Roswell Park Cancer Inst., 5 N.Y.3d 170 (2005) ................................................................... 38 Matter of Greer v. Wing, 95 N.Y.2d 676 (2001) ................................................................. 45 Matter of Lee v. Higgins, 213 A.D.2d 553 (2d Dep’t 1995) ................................................. 39 Matter of Moran Towing & Transp. Co. v. N.Y. State Tax Comm’n, 72 N.Y.2d 166 (1988) ........................................................... 28, 34 Matter of N.Y. State Clinical Lab Ass’n v. Kaladjian, 85 N.Y.2d 346 (1995) ......................................................... passim Matter of Pannhorst v. Sabol, 212 A.D.2d 794 (2d Dep’t 1995) ................................................. 14 Matter of Peck v. N.Y. State Div. of Hous. & Cmty. Renewal, 188 A.D.2d 327 (1st Dep’t 1992) ................................................ 39 Matter of Priester v. Dowling, 231 A.D.2d 638 (2d Dep’t 1996) ................................................. 66 Matter of Riley v. Dowling, 221 A.D.2d 446 (2d Dep’t 1995) ................................................. 66 vii TABLE OF AUTHORITIES (cont’d) Cases Page(s) Matter of Rivers v. Corron, 222 A.D.2d 863 (3d Dep’t 1995) ................................................. 39 Matter of Scibilia v. Regan, 199 A.D.2d 736 (3d Dep’t 1993) ................................................. 39 Matter of Scirica v. Bane, 216 A.D.2d 304 (2d Dep’t 1995) ................................................. 66 Matter of Wittlinger v. Wing, 289 A.D.2d 171 (1st Dep’t 2001) ................................................ 16 Matter of Wittlinger v. Wing, 99 N.Y.2d 425 (2003) ......................................................... passim McGrath v. Toys “R” Us, Inc., 3 N.Y.3d 421 (2004) ............................................................. 46, 60 Mighty Midgets, Inc. v. Centennial Ins. Co., 47 N.Y.2d 12 (1979) ..................................................................... 5 Molzof v. United States, 502 U.S. 301 (1992) .................................................................... 29 Omaha Tribe of Neb. v. Swanson, 736 F.2d 1218 (8th Cir. 1984) .................................................... 62 Parham v. Sw. Bell Tel. Co., 433 F.2d 421 (8th Cir. 1970) .................................................. 9, 12 Pastore v. Sabol, 230 A.D.2d 835 (2d Dep’t 1996) ................................................. 15 viii TABLE OF AUTHORITIES (cont’d) Cases Page(s) People v. Landes, 84 N.Y.2d 655 (1994) ................................................................. 47 Perdue v. Kenny A., 559 U.S. 542 (2010) .................................................................... 57 Pierce v. Underwood, 487 U.S. 552 (1988) .................................................................... 42 Rodriguez v. United States, 480 U.S. 522 (1987) .................................................................... 54 Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) .............................................................. 39, 59 S-1 and S-2 v. State Bd. of Educ. of N.C., 6 F.3d 160 (4th Cir. 1993) .............................................. 54, 55, 65 Smith v. State, 227 N.Y. 405 (1920) ................................................................... 38 State v. Rachmani Corp., 71 N.Y.2d 718 (1988) ................................................................. 47 Sullivan v. Stroop, 496 U.S. 478 (1990) .................................................................... 29 The Baltimore, 75 U.S. 377 (1869) ...................................................................... 28 ix TABLE OF AUTHORITIES (cont’d) Cases Page(s) State Statutes 110 Ill. Comp. Stat. § 13/5 .............................................................. 59 740 Ill. Comp. Stat. § 23/5 .............................................................. 58 Anderson, California Code of Ordinances § 8.29.060 ........................ 59 C.P.L.R. 904 .............................................................................................. 30 909 .............................................................................................. 59 1101 ............................................................................................ 30 2220 ............................................................................................ 30 5225 ............................................................................................ 31 5501 ............................................................................................ 30 8101 ............................................................................................ 29 8106 ............................................................................................ 29 8107 ............................................................................................ 29 8600 ............................................................................ 6, 22, 42, 44 8601 .................................................................................... passim 8602 .................................................................................... passim article 86 .................................................................................... 31 Ch. 379, § 258, 1848 N.Y. Laws 497 .............................................. 28 Ch. 566, § 1, 2011 McKinney’s N.Y. Laws 1492 ............................ 60 N.Y. City Admin. Code § 8-130 ........................................................................................ 60 § 8-502 ............................................................................ 18, 46, 58 x TABLE OF AUTHORITIES (cont’d) Federal Statutes Page(s) 5 U.S.C. § 504 ................................................................................... 7 28 U.S.C. § 2412 ..................................................................... 7, 8, 50 42 U.S.C. § 1988 ............................................................................. 36 State Regulations 18 N.Y.C.R.R. § 352.3 ........................................................................................ 19 § 381.3 ........................................................................................ 19 Miscellaneous Authorities A. 2068, 236th Sess. (2013) ............................................................ 18 A. 3264, 234th Sess. (2011) ............................................................ 18 A. 7395, 232d Sess. (2009) .............................................................. 17 Assembly Mem. in Support of A. 7395 ...................................... 17-18 Black’s Law Dictionary (5th ed. 1979) ........................................... 29 Budget Report on Bills, reprinted in Bill Jacket for ch. 36 (1992) ......................................................................... 56 Governor’s Approval Memorandum, reprinted in Bill Jacket for ch. 770 (1989) ..................................................... 43, 52, 53, 54 H.R. Conf. Rep. No. 96-1434 (1980) ............................................... 36 H.R. Rep. No. 94-1558 (1976) ......................................................... 36 xi TABLE OF AUTHORITIES (cont’d) Miscellaneous Authorities Page(s) Letter from Assemblyman Robin Schimminger to Evan Davis, Counsel to the Governor, reprinted in Bill Jacket for ch. 770 (1989) ....................................................................... 43 Letter from Senator John M. McHugh to Evan Davis, Counsel to the Governor, reprinted in Bill Jacket for ch. 770 (1989) ............................................................................. 43, 53 S. 4534, 232d Sess. (2009) .............................................................. 17 S. 5131, 234th Sess. (2011) ............................................................ 18 S. 713, 236th Sess. (2013) .............................................................. 18 S. Rep. No. 94-1011 (1976) ............................................................. 36 Senate Mem. in Support of S. 4534 ............................................... 18 PRELIMINARY STATEMENT This case concerns the New York City Human Resources Administration’s decision to reduce petitioner’s public assistance benefits. The New York State Office of Temporary and Disability Assistance determined the reduction was erroneous and ordered the City to restore petitioner’s benefits. The State had received, and had no reason to doubt, a report that the City had taken action to comply with the determination. When the City did not promptly restore her benefits, petitioner quickly commenced this C.P.L.R. article 78 proceeding. The City subsequently restored the benefits, and the proceeding was dismissed as moot. The question in this appeal is whether, in these circumstances, petitioner is eligible for an award of attorney’s fees as a “prevailing party” against the State under the New York State Equal Access to Justice Act (the New York EAJA or the Act). The Appellate Division, First Department, awarded fees, following a judge-made doctrine created by the lower federal courts to confer prevailing-party status when a lawsuit purportedly “catalyzed” a favorable change in the defendants’ 2 conduct but did not result in an enforceable judgment or order. That decision upends settled law. The United States Supreme Court has squarely rejected the catalyst doctrine under federal prevailing-party fee statutes, and New York courts uniformly held for over a decade prior to the decision below that catalyst fees are not available under the New York EAJA. The First Department’s decision also ignores the text, history, and purposes of the Act. The Legislature intended to follow settled background law requiring a party to obtain court- ordered relief, such as a favorable judgment or court-ordered consent decree, to be deemed a prevailing party; it had no intent to follow (and likely was not even aware of) the so-called catalyst theory. Awarding catalyst fees would, moreover, upset the balance of the Act’s dual goals: to incentivize suits against unreasonable state action while also carefully circumscribing the State’s (and ultimately the taxpaying public’s) potential fee liability. Finally, the First Department’s ruling subverts the longstanding “American Rule,” which has held for centuries that litigants are responsible for paying their own attorney’s fees 3 unless the Legislature expressly and clearly provides otherwise. Here, the Legislature has in recent years repeatedly considered, but failed to enact, proposals explicitly designed to enact the catalyst theory into the New York EAJA. The First Department would single-handedly override those legislative defeats based on its unjustified and unsubstantiated view that more lawyers should be “entice[d]” to sue the State. This Court should reverse the First Department’s effort to rewrite the statute in accordance with its own public policy preferences. In the alternative, the decision below should be reversed for the independent reason that even under the federal catalyst theory, petitioner would not qualify as a prevailing party because her suit did not cause any change in the State’s position. The State has consistently held, since before the commencement of this proceeding, that the City erroneously reduced petitioner’s public assistance benefits and that those benefits must be restored. Petitioner’s suit cannot be said to have “catalyzed” the State to take a position that it has held all along. 4 QUESTIONS PRESENTED 1. Did the Legislature incorporate the federal judge-made catalyst-fee doctrine into the New York EAJA where the statute awards attorney’s fees only to a “prevailing party,” a term of art with a settled meaning requiring a party to obtain court-ordered relief? 2. Even if catalyst fees were available under the New York EAJA, is petitioner eligible where the State agreed with her legal position and consistently sought the City’s compliance since before the proceeding was filed? The Appellate Division, First Department, answered both questions in the affirmative. STATEMENT OF THE CASE This appeal presents the question whether the Legislature intended to permit so-called catalyst fees under the New York State Equal Access to Justice Act. Because this question turns on several intersecting bodies of law governing attorney’s fees—the common law “American Rule,” the New York EAJA and the federal law on which it was modeled, and the federal catalyst 5 theory—we briefly describe that law before turning to the facts and procedural history of the case. A. Relevant Law Concerning Attorney’s Fees 1. The “American Rule” against awards of attorney’s fees In the United States, each litigant ordinarily “pays his own attorney’s fees” regardless of the outcome of the litigation. Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 252-53 (2010); accord Diamond v. Diamond, 307 N.Y. 263, 267 (1954). A plaintiff, win or lose, typically is not entitled to collect attorney’s fees from a defendant and likewise bears no responsibility for a defendant’s attorney’s fees. Chapel v. Mitchell, 84 N.Y.2d 345, 348 (1994). Because the American Rule against fee-shifting has existed for centuries as settled common law, it represents the default rule that guides litigation unless the Legislature makes an explicit and specific choice to the contrary. Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 269-71 (1975); Chapel, 84 N.Y.2d at 349; Mighty Midgets, Inc. v. Centennial Ins. Co., 47 N.Y.2d 12, 22 (1979). 6 2. The New York State Equal Access to Justice Act At issue here are the fee-shifting provisions of the New York EAJA, enacted in 1989 and codified at C.P.L.R. article 86. The Legislature enacted the statute “to help litigants secure legal assistance to contest wrongful actions of state agencies . . . [b]y allowing victorious plaintiffs to gain attorney’s fees” from the State. Matter of Wittlinger v. Wing, 99 N.Y.2d 425, 431 (2003). The Act was modeled on certain provisions of the federal Equal Access to Justice Act and “the significant body of case law that has evolved thereunder.” C.P.L.R. 8600. The federal statute, enacted in 1980 and codified in relevant part at 28 U.S.C. § 2412(d), provides for attorney’s fee awards in civil actions brought by or against the federal government. Like the federal statute, the state EAJA provides for fee recovery only to a “prevailing party,” C.P.L.R. 8601(a), a term of art with a settled meaning: a party “in whose favor a judgment is rendered.” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 (2001) (quotation marks omitted). 7 But the Legislature “did not intend to provide every plaintiff—or even every ‘prevailing’ plaintiff—with attorney’s fees.” Matter of Wittlinger, 99 N.Y.2d at 431. Borrowing limitations found in its federal counterpart, the New York EAJA authorizes fee awards only in cases where the State’s position was not “substantially justified” and no “special circumstances make an award unjust.” C.P.L.R. 8601(a). These restrictions are important because the state statute, like the federal EAJA, provides solely for one-way fee shifting. The State is not entitled to collect attorney’s fees from plaintiffs—even if the State prevails against vexatious or unjustified litigation. Despite modeling the Act on the federal EAJA, the Legislature also deviated from the federal statute in several important respects, imposing additional restrictions not found in the federal law to further limit the scope of available fee awards. First, while both statutes authorize the award of fees in civil actions, C.P.L.R. 8601(a); 28 U.S.C. § 2412(d), only the federal EAJA authorizes the award of fees in agency adjudications that do not give rise to a civil action, 5 U.S.C. § 504(a)(1). Second, the 8 classes of parties eligible for fees are defined more narrowly under the New York EAJA.1 Third, while the federal statute allows prevailing parties to collect fees whether they sue or are sued by the federal government, 28 U.S.C. § 2412(d)(1)(A), the New York statute allows only prevailing plaintiffs and petitioners to obtain fees, C.P.L.R. 8601(a), and does not authorize fees for defendants who prevail in suits brought by the State. Finally, unlike the federal EAJA, the New York statute includes a definition of “prevailing party” that serves to impose a higher threshold of success needed to qualify as a prevailing party than under the federal statute. While federal law has been interpreted to require a party only to prevail on “any significant issue,” the Act explicitly requires a party to prevail “in whole or in 1 The New York EAJA defines a “party” as—and thus limits eligibility for fees to—an individual whose net worth is $50,000 or less, an entity with one hundred or fewer employees, or a tax- exempt organization. C.P.L.R. 8602(d). The federal EAJA defines a “party” as an individual whose net worth is $2 million or less, an entity with a net worth of $7 million or less and five hundred or fewer employees, or a tax-exempt organization. 28 U.S.C. § 2412(d)(2)(B). 9 substantial part,” C.P.L.R. 8602(f). See Matter of N.Y. State Clinical Lab Ass’n v. Kaladjian, 85 N.Y.2d 346, 355 (1995). The New York EAJA thus represents a carefully calibrated scheme that balances two competing goals: helping plaintiffs retain counsel to challenge unreasonable state action, while narrowing the scope of fee awards in order to avoid either unwarranted drains on the public fisc or deterrence of legitimate agency actions. See Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 354-55, 357. 3. Development of the federal “catalyst theory” The catalyst theory was a judge-made, policy-driven doctrine created by lower federal courts beginning in the late 1960s and 1970s. Under the catalyst doctrine, courts awarded fees to plaintiffs who obtained the result they had sought in litigation even without a judgment on the merits of their claims, under the theory that the plaintiff’s lawsuit “catalyzed” or prompted action by the defendant. See, e.g., Parham v. Sw. Bell Tel. Co., 433 F.2d 421, 429-30 (8th Cir. 1970) (awarding fees under Title VII of the Civil Rights Act of 1964 because the plaintiff’s lawsuit “acted as a 10 catalyst which prompted the [defendant] to take action . . . seeking compliance with the requirements of Title VII”). In cases involving suits against the government, lower federal courts would apply the catalyst theory where the plaintiff obtained the relief sought in the lawsuit after a voluntary change in the government’s conduct or the revision of a statute or regulation in the plaintiff’s favor. Courts would then analyze whether there was a causal connection between the plaintiff’s filing of the lawsuit and the change by the government. Buckhannon, 532 U.S. at 609. As developed in some courts, the catalyst theory also required a further open-ended inquiry into the government’s subjective intent; it was necessary to determine whether the government made the change because it concluded that plaintiff’s lawsuit was likely to prevail on the merits, or whether the government acted for some other reason, such as to avoid the expense of litigation or for independent policy reasons. Id. at 609-10; id. at 628 (Ginsburg, J., dissenting). Unlike traditional prevailing-party status, which was readily administrable because it could be determined based on an existing 11 litigation record, application of the catalyst theory often required “‘a second litigation of significant dimension’” in each case— involving nuanced, fact-bound inquiries by courts of the nature and timing of the government’s change in conduct and, in some cases, of the government’s subjective motivation in changing conduct. Id. at 609-10 (quoting Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 791 (1989)). Moreover, catalyst fee awards threatened to deter legitimate government actions, such as making voluntary changes for the public benefit even in situations where the government does not view the change as legally mandated, or resolving litigation at a threshold stage where the anticipated cost of litigation far exceeds the government’s potential liability on the merits. Id. at 608. Lower federal courts nonetheless accepted the collateral costs because of two policies allegedly advanced by catalyst-fee awards. First, catalyst fees were intended to encourage potential plaintiffs to serve as private attorneys general and thereby ensure the aggressive enforcement of federal law—and often of federal civil rights law in particular. See Buckhannon, 532 U.S. at 623, 12 635-36 (Ginsburg, J., dissenting); Parham, 433 F.2d at 430 (stating that the plaintiff “performed a valuable public service in bringing this action” under Title VII of the Civil Rights Act of 1964). Second, the catalyst theory was thought necessary to counter “strategic maneuvers by defendants [that] might succeed in averting a fee award.” Id. at 636 n.10 (Ginsburg, J., dissenting). If, for example, a case had “gone to trial and developments have made it apparent that the judge was about to rule for the plaintiff,” the catalyst theory would prevent the defendant from “abort[ing] any award of attorney fees [at the] eleventh hour” through voluntary action mooting the claims. Id. (quotation marks omitted).2 Courts differed, however, in their application of the relevant legal test. The simplest version required only that the defendant provided some of what the plaintiff sought in the lawsuit and that the suit was a substantial or significant cause of that relief. See 2 Because the catalyst theory was judicially created rather than legislatively enacted, there are no legislative findings indicating that its “speculative” benefits outweigh its costs. Buckhannon, 532 U.S. at 608 (noting lack of “empirical evidence” that catalyst fee awards accomplished intended policy aims). 13 Buckhannon, 532 U.S. at 627-28 (Ginsburg, J., dissenting). But some circuits additionally required an examination of the merits of plaintiff’s suit. See id. at 627 (Ginsburg, J., dissenting); Long v. Bonnes, 455 U.S. 961 (1982) (Rehnquist, J., dissenting from denial of certiorari) (describing circuit split). And some circuits modified the causation prong by awarding fees only if the defendant’s change in conduct was motivated by plaintiff’s “threat of victory” rather than by expense or nuisance. Buckhannon, 532 U.S. at 610; id. at 628 (Ginsburg, J., dissenting). In enacting the New York EAJA, the Legislature did not use the term “catalyst” or include any language in the statute to define or set standards for so-called catalyst-fee awards. Nor was such language found in the federal EAJA. 4. The U.S. Supreme Court’s Buckhannon decision rejecting the catalyst theory In Buckhannon, the Supreme Court in 2001 rejected the catalyst theory as contrary to the proper interpretation of federal fee-shifting statutes that, like the state EAJA, award fees only to “prevailing parties”—thus ending the lower federal courts’ thirty- 14 year experiment with catalyst fees. When Congress enacted prevailing-party fee statutes, the term already had a longstanding meaning: a party “in whose favor a judgment is rendered” or who “has been awarded some relief by the court.” 532 U.S. at 603 (quotation marks omitted). The Court restored the traditional meaning of “prevailing party” that had been settled for nearly two hundred years by holding that parties are eligible for awards under prevailing-party fee statutes only if they obtain “enforceable judgments on the merits and court-ordered consent decrees.” Id. at 604. In contrast, a defendant’s voluntary change in conduct “falls on the other side of the line”: “although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, [it] lacks the necessary judicial imprimatur on the change.” Id. at 605. 5. New York law regarding the catalyst theory under the New York EAJA Prior to Buckhannon, Appellate Division decisions were in conflict regarding the availability of catalyst fees under the New York EAJA. Some decisions followed federal law in recognizing the catalyst theory. See, e.g., Matter of Pannhorst v. Sabol, 212 A.D.2d 15 794, 795 (2d Dep’t 1995) (recognizing that a party may prevail “regardless of whether she prevailed in a judgment” but denying fees because respondents sought to provide relief even prior to the suit). But at least one decision rejected the catalyst doctrine. See Pastore v. Sabol, 230 A.D.2d 835, 836-37 (2d Dep’t 1996) (denying prevailing- party status where plaintiffs received the retroactive benefits they sought but failed to obtain a valid “deci[sion] on the merits”). After Buckhannon was decided, however, New York case law uniformly rejected the catalyst theory under the New York EAJA—until the decision below. In an article 78 proceeding dismissed as moot because the City restored petitioner’s benefits after the commencement of the action, the First Department followed Buckhannon to hold that “there was no material alteration in the legal relationship of the parties sufficient to support an award of attorney’s fees” under the Act because the trial court did not issue an enforceable judgment on the merits. Matter of Auguste v. Hammons, 285 A.D.2d 417, 418 (1st Dep’t 2001). The First Department reaffirmed Matter of Auguste in another case that was mooted after the City restored petitioner’s 16 benefits, holding that the catalyst theory “is no longer a viable basis for an award of attorney’s fees” under the New York EAJA. Matter of Wittlinger v. Wing, 289 A.D.2d 171, 171 (1st Dep’t 2001). The First Department also concluded that the State’s position was substantially justified, and this Court affirmed the denial of attorney’s fees on those grounds. Matter of Wittlinger, 99 N.Y.2d at 432-33.3 This Court expressly declined to disturb the First Department’s decisions in Matter of Auguste and Matter of Wittlinger even though the catalyst issue was squarely presented and fully briefed by the parties and amici. Id. at 433. 3 This Court held that in light of the State’s attempts to prod the City to restore the petitioner’s benefits, the delay before the benefits were restored “was sufficiently explained and not so egregious as to fall outside the realm of substantial justification.” Matter of Wittlinger, 99 N.Y.2d at 432. 17 6. Failed attempts to enact the catalyst theory into the New York EAJA Attempts to amend the New York EAJA to provide for catalyst fee recovery have repeatedly failed. The Legislature first considered a bill to expand the Act’s definition of “prevailing party” in the 2009-2010 session. The proposal would have amended the Act to provide that “[t]he term ‘prevailing party’ shall include, in addition to a party who substantially prevails through a judicial or administrative judgment or order, or an enforceable written agreement, a party whose pursuit of a non- frivolous claim was a catalyst for a voluntary or unilateral change in position by the opposing party that provides any significant part of the relief sought.” A. 7395, 232d Sess. (2009); S. 4534, 232d Sess. (2009). The proposal was a direct response to “recent court decision[s], beginning with [Buckhannon],” and was intended to “mirror” recent amendments to the New York City Human Rights Law and a failed U.S. Senate bill to overrule Buckhannon. Assembly 18 Mem. in Support of A. 7395; Senate Mem. in Support of S. 4534.4 The bill was passed by the Assembly but failed in the Senate. The Legislature considered an identical proposal again in the 2011-2012 session, A. 3264, 234th Sess. (2011); S. 5131, 234th Sess. (2011), when it once again was passed by the Assembly before dying in the Senate. Finally, the Legislature considered the proposal for a third time in the 2013-2014 session. A. 2068, 236th Sess. (2013); S. 713, 236th Sess. (2013). After being passed by the Assembly and failing in the Senate yet again, the bill was passed by the Assembly for a second time this session and is currently pending in the Senate Judiciary Committee. 4 In 2005, the New York City Council responded to Buckhannon by amending the New York City Human Rights Law’s definition of “prevailing party” to expressly permit catalyst fees. See N.Y. City Admin. Code § 8-502(f). Other jurisdictions have also successfully enacted catalyst-fee provisions post- Buckhannon. See infra Point I.C. 19 B. Factual Background and Procedural History 1. The City’s delayed compliance with the State’s order to restore petitioner’s benefits Petitioner Luz Solla is a resident of New York City and a recipient of various public assistance benefits, including a shelter allowance provided to certain recipients diagnosed with AIDS or HIV-related illness (R. 23). See 18 N.Y.C.R.R. § 352.3(k). In September 2010, the New York City Human Resources Administration (HRA) issued a notice of decision stating that Solla’s monthly “[r]estricted shelter payment” would be reduced by approximately $200 per month, from $1,390.98 to $1,181.98 (R. 29). See 18 N.Y.C.R.R. § 381.3(d) (providing for “restricted payment” of shelter allowance directly to the landlord if the public assistance recipient has shown an inability to handle cash). The same notice indicated that certain other categories of benefits would remain unchanged or be increased (R. 29-31). Solla requested a fair hearing before the New York State Office of Temporary and Disability Assistance (OTDA) to challenge the reduction of her shelter allowance. At the hearing, 20 HRA agreed to reverse the reduction and to retroactively restore any lost benefits. OTDA accordingly determined, in a decision after fair hearing issued on November 29, 2010, that HRA had incorrectly reduced Solla’s shelter allowance and directed HRA to retroactively restore the benefits. (R. 39-40.) On or about March 28, 2011, Solla’s attorney submitted a request to OTDA seeking compliance by HRA with OTDA’s decision after fair hearing (R. 41). OTDA promptly responded by letter two days later, informing Solla that it had “received a report” confirming that HRA had “taken appropriate action to comply with the decision’s directives.” OTDA accordingly considered the matter “satisfactorily resolved.” (R. 42.) 2. Proceedings below HRA in fact had not yet restored Solla’s benefits. But rather than contact OTDA for continued assistance, Solla commenced this C.P.L.R. article 78 proceeding on May 6, 2011. Solla sought an order directing HRA and the HIV/AIDS Services Administration to comply with, and OTDA to “enforce compliance” with, the decision after fair hearing (R. 26). The petition does not allege that OTDA had any 21 reason to doubt HRA’s initial report of compliance. Nor does the petition identify any additional steps that OTDA allegedly should have taken with respect to Solla’s shelter allowance. By May 23, 2011, HRA restored Solla’s shelter allowance to $1,390.98 per month and paid retroactive benefits totaling $1,672 (R. 65, 72, 74, 75). Finding that HRA had “fully complied” with OTDA’s decision, Supreme Court, New York County (Hunter, J.), concluded that Solla had obtained “the full relief [she] sought” and accordingly dismissed the petition as moot (R. 13-14). Supreme Court also addressed the request set forth in Solla’s petition for attorney’s fees under the New York EAJA. Relying on the First Department’s decision in Matter of Auguste, Supreme Court held that Solla was not a “prevailing party” under the Act because she did not obtain any enforceable judgment in the proceeding. Accordingly, Solla was not entitled to attorney’s fees. (R. 14.) A majority of the First Department reversed, declining to adhere to Matter of Auguste and Matter of Wittlinger and instead holding that catalyst fees are available under the New York EAJA. The court began with the premise that under the provision 22 declaring the Act similar to “the significant body of case law that has evolved” under the federal EAJA, C.P.L.R. 8600, the statute incorporated the federal catalyst theory as it existed in 1989—but did not follow federal law when the Supreme Court rejected the catalyst theory in Buckhannon (R. 148, 154-156). The First Department majority then looked for, but did not find, statutory text in the New York EAJA explicitly rejecting the catalyst theory. For example, the definition of “prevailing party” did not explicitly “require the entry of a judgment” (R. 153). The court concluded from the fact that the text of the Act does not expressly reject the catalyst theory that the Legislature actually implicitly adopted it (see R. 147-148, 157-158). The court further justified its adoption of the catalyst theory on policy grounds. According to the majority, low-income individuals “would be hard-pressed to find qualified attorneys to commence cases for them” without the catalyst theory, because the New York EAJA would not “entice” enough lawyers to take on suits against the State (R. 165, 166). According to the court, “only 23 the Legislature should make [the] public policy determination” to eliminate catalyst fees (R. 166). Finally, the First Department concluded that the circumstances of this case “undoubtedly” satisfied the catalyst standard and entitled Solla to fees, but it did not articulate the requirements of the catalyst test, offer any reasoning, or cite any authority (R. 149). The majority did not specify, for example, whether the New York EAJA should be interpreted to incorporate any particular variant of the catalyst theory developed in the lower federal courts, or the version proposed in unsuccessful bills to amend the statute. The court remanded the case for a hearing to determine the size of the fee award (R. 167). Justice Sweeny dissented. He would have followed Buckhannon and adhered to Matter of Auguste and Matter of Wittlinger to hold that catalyst fees are not available under the Act—particularly given that the Legislature could have amended the statute in the decade since those cases were decided but had failed to do so (R. 178). 24 Justice Sweeny also warned that the majority’s decision would have several deleterious consequences. The availability of the new category of catalyst fees would lead to “a raid on the State’s coffers” (R. 170). For example, under a catalyst-fee regime, there was a serious “potential for abuse” in delayed-compliance cases like this one: once an article 78 petition is filed, any subsequent compliance might be deemed to have been catalyzed by the suit—even if compliance “was already in the works” and no lawsuit was ever necessary (R. 176-177). Furthermore, the judicial inquiry required under the “broad and ill defined standard of the catalyst theory” would “place an undue burden on an already thinly stretched judiciary and overburdened agency” (R. 173, 177). Justice Sweeny concluded that adoption of the catalyst theory—a “policy decision elevating one conflicting public policy determination over the other”—was best left to the Legislature (R. 179). 25 ARGUMENT The decision below should be reversed for two reasons. First, the text, history, and purposes of the New York EAJA all refute the claim that the Legislature intended to incorporate the federal catalyst theory as a basis for imposing prevailing-party attorney’s fees against the State. Alternatively, even if the Act were assumed to incorporate the now-repudiated federal catalyst theory, petitioner did not satisfy the catalyst standard because she did not cause any change in the State’s position with respect to her right to the restoration of benefits erroneously reduced by the City. POINT I THE LEGISLATURE DID NOT INCORPORATE THE FEDERAL CATALYST THEORY INTO THE NEW YORK EQUAL ACCESS TO JUSTICE ACT The New York EAJA does not use the term “catalyst” or give standards for the award of fees where a party has purportedly “catalyzed” state action. The First Department majority reasoned that catalyst fee awards should nonetheless be available because the Legislature did not expressly reject application of federal catalyst theory in the text of the New York EAJA. But as explained below, that flips the interpretive inquiry on its head: the 26 Legislature must be presumed to have incorporated into the statute settled New York and federal law requiring a party to obtain court-ordered relief to be deemed a “prevailing party,” and petitioner must show that the Legislature affirmatively intended to depart from that settled meaning. Furthermore, because the New York EAJA is both a fee statute and legislation that creates liability against the State, it must be construed narrowly. Even if the text and legislative history of the Act were considered ambiguous on the issue of the catalyst theory (and they are not), catalyst fees would have to be rejected in any event because the statute lacks a clear statement authorizing the award of fees in the absence of court-ordered relief. A. The Text and History of the New York EAJA Establish that a Party Must Obtain Court- Ordered Relief to Be a “Prevailing Party.” The Legislature has authorized the award of attorney’s fees under the New York EAJA only to a “prevailing party,” C.P.L.R. 8601(a), a term defined as a plaintiff or petitioner in a civil action against the State who “prevails in whole or in substantial part where such party and the [S]tate prevail upon separate issues,” 27 C.P.L.R. 8602(f). The First Department majority found legislative intent to incorporate the federal catalyst theory, as adopted by lower federal courts, because this definition of “prevailing party” does not specifically “require the entry of a judgment” (R. 153). But the Legislature does not write statutes on a blank slate. When it uses a term of art in an enactment, the Legislature “presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken.” FAA v. Cooper, 132 S. Ct. 1441, 1449 (2012) (quotation marks omitted). The term “prevailing party” already had a longstanding meaning tied to court-ordered relief, and that meaning was incorporated into the New York EAJA. The Legislature therefore had no need to specify, as the First Department majority demanded, that fee awards are available only upon the entry of such judicial relief. 28 1. The statutory text incorporates the traditional requirement that a prevailing party obtain a favorable judgment or other judicial relief. The Legislature is presumed, absent some contrary indication, to intend that legal terms of art have their “well settled legal meaning.” Matter of Moran Towing & Transp. Co. v. N.Y. State Tax Comm’n, 72 N.Y.2d 166, 173 (1988) (quotation marks omitted). Here, long before the Legislature authorized fee awards in the New York EAJA, the term “prevailing party” already had a settled legal meaning—in the closely related contexts of both cost awards and fee awards—that was consistently tied to obtaining court-ordered relief. Both state and federal courts have awarded costs “to the prevailing party, as incident to the judgment,” since the early days of the Nation. The Baltimore, 75 U.S. 377, 388 (1869) (emphasis added) (describing rule in effect “at the time the judicial system of the United States was organized”). In New York, since at least 1848, with the enactment of the Field Code, courts have been authorized to award costs in civil actions “to the prevailing party, upon the judgment.” Ch. 379, § 258, 1848 N.Y. Laws 497, 544 29 (emphasis added). Consistent with these established practices, when the New York EAJA was enacted, the term “prevailing party” was widely understood in the legal community to mean “[t]he one in whose favor the decision or verdict is rendered and judgment entered.” Black’s Law Dictionary 1069 (5th ed. 1979) (citing New York law on costs; emphasis added).5 Modern New York law has expanded somewhat the class of parties who may recover costs beyond only those “in whose favor a judgment is entered,” C.P.L.R. 8101. Courts are now authorized to award costs after “rendering decision on [a] motion” in a party’s favor, Matter of Baker, 284 N.Y. 1, 10 (1940); see C.P.L.R. 8106, as well as to a party “in whose favor an appeal is decided,” C.P.L.R. 8107. But each of these modern cost provisions is like the original Field Code in a fundamental respect: they all tie prevailing-party 5 Courts routinely consult “[l]egal dictionaries in existence when the [statute] was drafted and enacted” to interpret a term of art. See, e.g, Molzof v. United States, 502 U.S. 301, 307 (1992). The First Department’s reliance (R. 157) on the definition of the word “prevail” in a nonlegal dictionary is misplaced: consulting general reference dictionaries to interpret the individual words in a term of art “is not apt to illuminate its meaning.” Sullivan v. Stroop, 496 U.S. 478, 482-83 (1990). 30 status to obtaining a favorable court ruling—a ruling on a motion, a judgment in the action, or a decision on appeal. Other provisions of the C.P.L.R. employ the concept of a prevailing party in similar fashion. For example: • When a movant secures “[a]n order determining a motion” in his favor that is required to be filed in another county, he is “the party prevailing on the motion” and bears the obligation to effect such filing. C.P.L.R. 2220(a). • If an inmate “obtains a judgment” in an action that exceeds the amount of the filing fee paid to commence the action, he is a “prevailing inmate” entitled to a taxable disbursement in the amount of the fee paid. C.P.L.R. 1101(f)(4). • The “prevailing party” in a class action may be awarded the expenses for providing notice to the class after obtaining a “termination of the action by order or judgment.” C.P.L.R. 904(d)(II). • An appeal from a final judgment brings up for review any order adverse to the respondent that, if “reversed” by the appellate court, “would entitle [him] to prevail in whole or in part on that appeal.” C.P.L.R. 5501(a)(1). The common thread in each of these uses is that the party must obtain a court ruling in his favor—the grant of a motion, a money judgment, an order or judgment in a class action, or an appellate reversal—in order to be considered a prevailing party in the specific procedural context at issue. The term “prevailing party” in 31 the New York EAJA, C.P.L.R. article 86, should be interpreted to share this same feature consistently found in these other C.P.L.R. provisions. See Commonwealth of the N. Mar. I. v. Canadian Imperial Bank of Commerce, 21 N.Y.3d 55, 62-63 (2013) (interpreting a phrase in C.P.L.R. 5225(b) with reference to various C.P.L.R. provisions). This traditional meaning of the term “prevailing party” is confirmed by this Court’s own usage of the term in the context of attorney’s fees. In describing the American Rule, this Court frequently contrasts the prevailing party with the “losing party” or the “loser.” E.g., Chapel, 84 N.Y.2d at 348-49 (quoting Alyeska Pipeline Serv., 421 U.S. at 247); Matter of A.G. Ship Maint. Corp. v. Lezak, 69 N.Y.2d 1, 5 (1986). But the notion of losing in litigation is most sensibly understood to mean losing a ruling by the court. For example, a defendant in a civil action might lose a motion to dismiss if the court denies it, or lose the lawsuit if the court finds him liable, or lose an appeal if the appellate court decides against him. But if that same defendant were to voluntarily withdraw the motion or appeal before the court ruled, 32 agree to an out-of-court settlement in which the plaintiff releases the claims against him, or engage in voluntary conduct that moots the claims and results in the suit’s dismissal, one would not ordinarily think of him as the losing party. Thus, the best understanding of the terms “prevailing party” and “losing party” is that they are two sides of the same coin, and it is a judicial ruling that confers a party’s status as one or the other. Cf. Funk v. Barry, 89 N.Y.2d 364, 368 n.* (1996) (discussing the process of entering judgments by the “prevailing party” and the “losing party”). Consistent with this understanding, numerous federal fee statutes incorporated the meaning of “prevailing party” as one “in whose favor a judgment is rendered” or who “has been awarded some relief by the court.” Buckhannon, 532 U.S. at 602-03 (quotation marks omitted). Finally, the settled meaning of “prevailing party” tied to court-ordered relief is further confirmed by the absence of New York case law departing from it. Neither petitioner nor the First Department majority identified in the appeal below even a single case adopting the catalyst theory of prevailing-party status as a matter of New York law prior to the passage of the New York 33 EAJA, and we are aware of none. To the contrary, the little case law on the issue rejected the catalyst theory. Thus, where out-of- court developments rendered a case moot, the Appellate Division denied fees under the Open Meetings Law’s “successful party” fee provision. Jones v. Koch, 117 A.D.2d 647, 648 (2d Dep’t), lv. denied, 68 N.Y.2d 608 (1986). The court rejected the dissent’s contention that fees should be awarded even though the suit “d[id] not result in a formal judgment in [the plaintiffs’] favor,” because “commencement of this litigation served as the catalyst” for the out- of-court relief obtained. Id. at 649-50 (Thompson, J., dissenting).6 Against this settled background law, there is no text in the New York EAJA indicating that the Legislature intended a different meaning. The language of the Act does not specify, for example, that a prevailing party includes a person whose lawsuit results in an out- of-court settlement with the State or a voluntary change in the 6 The First Department erroneously cited Jones as a case in which a New York court recognized the catalyst theory under a federal fee-shifting statute (R. 157). As explained above, Jones concerned a fee request under New York law rather than federal law, and the court rejected the catalyst theory. 34 State’s complained-of conduct. Nor does the statute refer to awarding fees to a party whose suit had a catalytic effect permitting him to obtain the relief sought without a court order or judgment. In the absence of any such statutory language, the Legislature must be presumed to have adhered to the settled meaning of “prevailing party” requiring court-ordered relief. See Matter of Moran Towing & Transp., 72 N.Y.2d at 173. After all, “courts typically do not rely on legislative silence to infer significant alterations of existing law.” Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 72 (2013). Thus, in light of the settled meaning of “prevailing party” used in the context of costs, in other provisions of the C.P.L.R., and in this Court’s precedents describing the American Rule, the Legislature’s use of the established term of art in the New York EAJA is best understood to incorporate the longstanding requirement of court-ordered relief. 35 2. The legislative history confirms that there was no intent for the New York EAJA to depart from the traditional meaning of “prevailing party.” To be sure, the Legislature had the power to adopt a different meaning of “prevailing party” in the New York EAJA. But there is no indication in the legislative history of the statute that the Legislature harbored any intent to enact the catalyst theory into New York law. That history does not cite a single catalyst-theory decision from any jurisdiction or describe awarding attorney’s fees to plaintiffs or petitioners in the absence of court-ordered relief. Nor does the legislative history mention any of the policy rationales underlying adoption of the catalyst theory in the federal courts. There is no discussion, for example, of the need to encourage article 78 petitioners to act as private attorneys general to effect stronger enforcement of any specific areas of state law. Nor are state agencies criticized for strategically mooting out cases late in the day in order to avoid fee awards. The lack of any sign of the catalyst theory in the Act’s legislative history stands in stark contrast to the history of federal statutes in the heyday of the catalyst era. Committee reports for 36 the federal Civil Rights Attorney’s Fees Awards Act of 1976, 42 U.S.C. § 1988(b), cited a handful of early catalyst-theory cases and stated that the term “prevailing party” was “not intended to be limited to the victor only after entry of a final judgment following a full trial on the merits” and that fees should be awarded when a party obtains “an out-of-court settlement” or the defendant “voluntarily cease[s] the unlawful practice” after the suit is filed. H.R. Rep. No. 94-1558, at 7 (1976); accord S. Rep. No. 94-1011, at 5 (1976). Similarly, the legislative history of the federal EAJA states that “[t]he phrase ‘prevailing party’ is not to be limited to a victor only after entry of a final judgment following a full trial on the merits; its interpretation is to be consistent with the law that has developed under existing statutes.” H.R. Conf. Rep. No. 96-1434, at 21 (1980).7 There is no comparable language in the legislative history of the New York EAJA. 7 The report states that a party “may be deemed prevailing if the party obtains a favorable settlement of his case,” H.R. Conf. Rep. No. 96-1434, at 21, but it does not refer to situations in which the lawsuit causes a voluntary change in the defendant’s conduct. 37 In rejecting the catalyst theory, the Supreme Court dismissed the legislative history of 42 U.S.C. § 1988(b) as “clearly insufficient to alter the accepted meaning” of the term “prevailing party,” especially in light of the American Rule’s prohibition on awarding attorney’s fees “absent explicit statutory authority.” Buckhannon, 532 U.S. at 608 (quotation marks omitted). That reasoning applies with even greater force here. The utter silence of the legislative history of the New York EAJA with respect to the catalyst theory speaks volumes: the Legislature did not intend to adopt a new meaning of “prevailing party” unmoored from court-ordered relief. 3. The American Rule and the State’s sovereign immunity require the catalyst theory to be rejected. Even if the text and legislative history of the New York EAJA were arguably ambiguous, canons of statutory interpretation would prohibit the First Department majority’s approach of incorporating the catalyst theory into the statute because the Legislature did not expressly prohibit or preclude catalyst awards. First, fee statutes like the New York EAJA must be interpreted strictly rather than expansively because they are in 38 derogation of the common-law American Rule. See Baker v. Health Mgmt. Sys., Inc., 98 N.Y.2d 80, 88 (2002); Diamond, 307 N.Y. at 267. The Legislature must “clearly” indicate its intent to shift fees. Hardt, 560 U.S. at 254-55. Fees should be awarded only when “the clear import of the language used in [the] statute absolutely requires.” Gottlieb v. Kenneth D. Laub & Co., 82 N.Y.2d 457, 465 (1993) (emphasis added; quotation marks omitted). In the absence of “‘explicit statutory authority,’” attorney’s fees are unavailable. Baker, 98 N.Y.2d at 88 (emphasis in original; quoting Buckhannon, 532 U.S. at 602). Second, statutory waivers of the State’s sovereign immunity are also in derogation of the common law and must be narrowly construed. Matter of Bello v. Roswell Park Cancer Inst., 5 N.Y.3d 170, 173 (2005); Smith v. State, 227 N.Y. 405, 410 (1920). The New York EAJA “renders [the State] liable for attorney’s fees for which it would not otherwise be liable, and thus amounts to a partial waiver of sovereign immunity.” Ardestani v. INS, 502 U.S. 129, 137 (1991). When interpreting fee statutes, courts must take care not to enlarge a fee statute’s sovereign-immunity waiver “beyond 39 what the language requires.” Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-86 (1983) (quotation marks omitted) (Clean Air Act fee provision). Thus, the New York EAJA must be “strictly construed” in favor of the State. Ardestani, 502 U.S. at 137 (narrowly construing federal EAJA).8 These interpretive canons help to ensure that “legislative judgment[s] regarding the allocation of legal fees” and the waiver of sovereign immunity are respected, Chapel, 84 N.Y.2d at 349, and not disrupted by courts “redistributing litigation costs” based on their own “assessment of the importance of the public policies” that might be advanced by awarding fees in contradiction of the Legislature’s goals, Alyeska Pipeline Serv., 421 U.S. at 269, 271. Here, the Legislature chose to balance two competing goals— 8 The Appellate Division has consistently recognized that the New York EAJA is in derogation of the common law and must be strictly construed. Matter of Rivers v. Corron, 222 A.D.2d 863, 864 (3d Dep’t 1995); Matter of Lee v. Higgins, 213 A.D.2d 553, 553-54 (2d Dep’t 1995); Matter of Scibilia v. Regan, 199 A.D.2d 736 (3d Dep’t 1993); Matter of 2421 Realty Co. v. N.Y. State Div. of Hous. & Cmty. Renewal, 193 A.D.2d 571, 572 (1st Dep’t 1993); Matter of Peck v. N.Y. State Div. of Hous. & Cmty. Renewal, 188 A.D.2d 327 (1st Dep’t 1992). 40 helping plaintiffs afford counsel to challenge unreasonable state action while also limiting the scope of potential state liability for fee awards—by, among other things, imposing a stricter prevailing-party standard under the New York EAJA than its federal counterpart requires. Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 354-55, 357. And the Legislature has declined to legislatively overrule post-Buckhannon decisions rejecting the catalyst theory under the Act, despite repeated calls for it to do so. See supra at 17-18. By expansively interpreting the New York EAJA to permit catalyst fees that the Legislature has been unwilling to authorize, the First Department majority recalibrated the policies of the statute and imposed increased burdens on the State’s taxpayers—both tasks reserved for the Legislature. See Alyeska Pipeline Serv., 421 U.S. at 269. See also infra Point I.B.4. 41 B. The First Department’s Grounds for Adopting the Catalyst Theory Have No Merit. The First Department majority offered essentially four reasons for adopting the catalyst theory despite the absence of express statutory text or legislative history departing from the settled meaning of prevailing party and authorizing catalyst fee awards: (1) the reference in C.P.L.R. 8600 to case law under the federal EAJA; (2) the differences in the scope of the New York EAJA and its federal counterpart; (3) the Act’s definition of a “final judgment”; and (4) the policy of funding low-income litigants against the State. None of these grounds overcomes the text and history demonstrating that the Act requires court-ordered relief to attain prevailing-party status. 1. The Legislature did not intend C.P.L.R. 8600 to incorporate the federal catalyst theory. The First Department majority deemed it a “critical fact” that when the New York EAJA was enacted in 1989, case law recognized the catalyst theory under the federal EAJA (R. 156). The court thus suggested that those federal decisions were 42 incorporated into New York law via the provision declaring the Act “similar to” the federal EAJA and “the significant body of case law that has evolved thereunder,” C.P.L.R. 8600. But the majority acknowledged (R. 160) that the Legislature did not intend the New York EAJA to follow its federal counterpart “for all purposes,” but rather “was focused on a narrow range of issues which it intended to be addressed consistently” with federal law. Indeed, the Act’s legislative history shows that the Legislature intended the statute to follow federal law in certain important respects having nothing to do with the catalyst theory: • First, the Legislature intended “the ‘substantially justified’ standard discussed in” a then-recent Supreme Court decision, Pierce v. Underwood, 487 U.S. 552 (1988), to “serve as the controlling interpretation of that phrase in the New York EAJA.” • Second, the Legislature intended Pierce’s “discussion of limitations on fee awards [to] serve as the interpretive standard for the New York EAJA, and “did not contemplate” the enhancement of fee awards above prevailing market rates. • Third, the Legislature intended the New York EAJA to cover fees incurred in administrative proceedings that occur as a result of the litigation, but not those that 43 precede the action—a distinction that “comports with the federal case law.” Letter from Assemblyman Robin Schimminger to Evan Davis, Counsel to the Governor, reprinted in Bill Jacket for ch. 770 (1989), at 8-9; accord Letter from Senator John M. McHugh to Evan Davis, Counsel to the Governor, reprinted in Bill Jacket for ch. 770, supra, at 5; Governor’s Approval Memorandum, reprinted in Bill Jacket for ch. 770, supra, at 20-21. Thus, the legislative history offers no indication that the Legislature ever considered or was even aware of the federal catalyst theory—let alone that it intended the New York EAJA to follow federal case law recognizing the theory. But even if one were to conclude that C.P.L.R. 8600 required New York courts to follow federal case law endorsing the catalyst theory in 1989, that same provision would require rejection of the catalyst theory today. In 2001, the U.S. Supreme Court squarely held that “[a] defendant’s voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve in the lawsuit, lacks the necessary judicial imprimatur on the change” to confer prevailing-party status. Buckhannon, 532 U.S. at 605. All 44 of the federal courts of appeals that have considered the issue have applied Buckhannon’s holding to the federal EAJA. Ma v. Chertoff, 547 F.3d 342, 344 (2d Cir. 2008) (per curiam) (collecting decisions from seven other circuits). Thus, case law under the federal EAJA “has evolved” to reject the catalyst theory, C.P.L.R. 8600, and, under the First Department majority’s own rationale, New York courts must follow suit. The First Department majority avoided following Buckhannon by concluding that the Legislature intended to incorporate federal law regarding the catalyst theory only as it existed at the time the New York EAJA was enacted in 1989. But that conclusion is flawed for at least three reasons. First, the statutory text declares the Act to be similar to the federal EAJA and “case law that has evolved” thereunder. C.P.L.R. 8600 (emphasis added). The Legislature’s choice of the word “evolved” indicates an intent that the Act continue to be similar to federal law as it might change and develop. If the Legislature had instead meant to keep the statute “frozen in time,” similar only to lower federal court case law as it existed in 1989, the chosen language 45 was a particularly “convoluted” way of saying so (R. 172 [Sweeny, J., dissenting]). The Legislature could have more clearly frozen the law in place by stating, for example, that the Act is similar to federal case law “as it exists as of the date of this enactment.” Or it could have codified particular then-existing federal interpretations directly into the statute. Second, this Court routinely consults evolving federal law in interpreting state statutes. For example, this Court relied on federal EAJA case law decided after the enactment of the New York EAJA to interpret the state law’s substantial-justification requirement in favor of the government. See Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 356-57 (relying on Commissioner, Immigration & Naturalization Serv. v. Jean, 496 U.S. 154 (1990), and Roanoke River Basin Ass’n v. Hudson, 991 F.2d 132 (4th Cir. 1993)).9 9 In another case, this Court followed a Supreme Court decision issued while the New York EAJA bill was pending, and gave no indication that it would have ignored that decision if it had been issued just a few months later. Matter of Greer v. Wing, 95 N.Y.2d 676, 681 (2001) (relying on Sullivan v. Hudson, 490 U.S. 877 (1989)). 46 This Court has also relied on post-enactment federal law to interpret the New York City Human Rights Law’s fee provision, N.Y. City Admin. Code § 8-502(f). Specifically, the Court applied the Supreme Court’s holding in Farrar v. Hobby, 506 U.S. 103, 115 (1992)—that plaintiffs who recover only nominal damages ordinarily “should receive no attorney’s fees at all” under 42 U.S.C. § 1988(b)—even though Farrar post-dated enactment of the local fee provision by more than a year. McGrath v. Toys “R” Us, Inc., 3 N.Y.3d 421, 433 (2004). The Court expressly rejected the plaintiffs’ appeals to the Human Rights Law’s antidiscrimination purpose, concluding that “such broad expressions of overriding policy offer no basis to” decline to follow the Supreme Court’s decision narrowing the availability of fees. Id. Ultimately, it was up to the City Council to express any “disagreement with evolving Supreme Court precedent,” and the Council “ha[d] not acted to alter the attorney’s fee provision in the 12 years since Farrar.” Id. at 433-34 (emphasis added).10 10 This Court has likewise relied on post-enactment federal (continued on next page) 47 Third, to the extent there is any ambiguity in C.P.L.R. 8600’s reference to federal law “that has evolved,” it must be construed, in light of the American Rule and the State’s sovereign immunity, to limit the imposition of fee liability against the State, see supra Point I.A.3—which in this context means following Buckhannon’s rejection of the catalyst theory. 2. Differences in the scope of the New York EAJA and the federal EAJA do not imply incorporation of the catalyst theory. The First Department majority’s decision also relied on certain textual differences in the scope of the New York EAJA and the federal EAJA: specifically, the lower net-worth and employee law in other contexts. For example, federal law guides interpretation of the Martin Act, General Business Law art. 23-A, and this Court has not hesitated to follow federal securities precedents that post-date passage of the statute by more than half a century. E.g., State v. Rachmani Corp., 71 N.Y.2d 718, 726-27 (1988) (following TSC Indus., Inc. v. Northway, 426 U.S. 438 (1976), and Basic Inc. v. Levinson, 485 U.S. 224 (1988)). Indeed, this Court follows evolving federal securities precedents even though the Martin Act predates the very existence of the federal securities statutes by over a decade. People v. Landes, 84 N.Y.2d 655, 660 (1994) (noting that the Martin Act was enacted in 1921 and the federal securities acts were enacted in 1933 and 1934). 48 caps that make fewer parties eligible for fees under the New York law, and the statutory definition of “prevailing party” in the Act that serves to impose a higher threshold of success needed to qualify as a prevailing party than under the federal EAJA. See supra at 7-9. The court “presumed” from these differences that the Legislature “considered all of the ways in which it could have made the statute more restrictive than the federal law” and determined that these were the only “necessary” ones (R. 156 [emphasis added]). According to the First Department majority, the fact that the text of the Act does not expressly reject the catalyst theory shows that the Legislature actually implicitly adopted it (see R. 147-148, 157-158). The court’s approach flips the proper interpretive inquiry on its head. As we have already demonstrated, in the absence of any affirmative evidence to the contrary, the Legislature must be presumed to have adopted the traditional meaning of “prevailing party” tied to court-ordered relief. See supra Point I.A. Furthermore, the court’s reasoning once again ignores a point that it acknowledged elsewhere in the opinion—that the Legislature 49 never intended to follow federal law “for all purposes” (R. 160). The Legislature was not required to explicitly disavow in the text of the Act a line of federal catalyst-theory cases about which it may not have even been aware. The First Department majority’s approach also overlooks the true import of the distinctions between the federal and state statutes. This Court has concluded that those differences reflect a legislative intent “to impose a stricter standard for demonstrating prevailing party status under the State EAJA than under its Federal counterpart.” Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 354 (emphasis added). Yet the First Department majority would infer from those very same differences that state law should have a far more expansive prevailing-party standard—by recognizing the catalyst theory that federal law now definitively rejects. 50 3. The definition of “final judgment” does not smuggle the federal catalyst theory into the New York EAJA. The First Department majority’s ruling also cited a difference between the state and federal definitions of a “final judgment.” A final judgment is defined in the federal EAJA as “a judgment that is final and not appealable, and includes an order of settlement,” 28 U.S.C. § 2412(d)(2)(G), and in the New York EAJA as “a judgment that is final and not appealable, and settlement,” C.P.L.R. 8602(c). The court “presumed” that by using the word “settlement” rather than the phrase “order of settlement,” the Legislature intended “to broaden the types of settlements” that can confer prevailing-party status (R. 159-160). But it would be unnecessarily convoluted for the Legislature to alter the settled meaning of “prevailing party”—and in the process drastically expand the State’s potential fee liability—in the definition of “final judgment” rather than directly in the definition of “prevailing party” itself, C.P.L.R. 8602(f), or in the operative provision creating the entitlement to fees, C.P.L.R. 8601(a). Cf. Cruz, 22 N.Y.3d at 72 (“[L]egislative bodies generally 51 do not hide elephants in mouseholes.” (quotation marks omitted)). This is especially so given that the statute’s only use for the definition of “final judgment” is in a procedural provision describing the timing and form of a fee application, C.P.L.R. 8601(b). And the American Rule and the State’s sovereign immunity also prohibit giving this procedural definition such a fee-expanding construction. See supra Point I.A.3. But even if the First Department majority were correct that the definition of “final judgment” alters the meaning of “prevailing party” to include a party who obtains an out-of-court settlement, that proposition would be of no use to petitioner, whose litigation did not conclude in a settlement at all. The most this proceeding can be said to have catalyzed is the City’s voluntary change in conduct, and not even a strained reading of the definition of “final judgment” could stretch the meaning of “prevailing party” far enough to encompass petitioner here. 52 4. The catalyst theory is inconsistent with the balance of goals the New York EAJA was designed to achieve. The First Department majority adopted the catalyst theory based on the view that without it, low-income individuals “would be hard-pressed to find qualified attorneys to commence cases for them” because the New York EAJA would not “entice” enough lawyers to take on suits against the State (R. 165, 166). Those candid statements represent a policy judgment that only the Legislature is entitled to make. See infra Point I.C. They also reflect an error in statutory interpretation, because the court appeared to misunderstand the purposes of the Act. The New York EAJA was enacted to achieve two equally important goals that are logically in tension. As the name of the statute suggests, one purpose of the Act is to “improv[e] access to justice for individuals and businesses who may not have the resources to sustain a long legal battle against an agency that is acting without justification.” Governor’s Approval Memorandum, reprinted in Bill Jacket for ch. 770, supra, at 20. But at the same time, the statute is designed to place “adequate restraints on the 53 amount of fees awarded” and thus “not deter State agencies from pursuing legitimate goals.” Id. The Legislature carefully calibrated the Act to balance these two goals, and the limits placed on the State’s potential fee liability were critical to passage of the statute. See id. at 20-21; Letter from Senator John M. McHugh to Evan Davis, Counsel to the Governor, reprinted in Bill Jacket for ch. 770, supra, at 5. As this Court has explained, the Legislature balanced these two purposes with respect to the definition of “prevailing party” by “impos[ing] a stricter standard for demonstrating prevailing party status under the State EAJA than under its Federal counterpart.” Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 354 (emphasis added). Despite paying lip service to the equal importance of both purposes (see R. 152, 162), the First Department majority clearly adopted the catalyst theory to achieve only one: the “laudatory” purpose of expanding access to justice (R. 162-163, 166). According to the court, this goal would be “eviscerated” without the catalyst theory (R. 165). At the same time, the First Department majority effectively ignored the independent legislative purpose of limiting 54 the State’s fee liability. The court claimed that the catalyst theory would not create “an avalanche of fee awards” (R. 165), but the New York EAJA was designed to place meaningful “restraints” and “limitations” on fees—not merely to avoid an avalanche of liability. Governor’s Approval Memorandum, reprinted in Bill Jacket for ch. 770, supra, at 20. The majority also ignored the related purpose of “not deter[ring] State agencies from pursuing legitimate goals,” id., which catalyst fees would undermine by discouraging the government from making “worthwhile changes [that] may be retroactively linked to a lawsuit and result in a hefty bill” for fees, S-1 and S-2 v. State Bd. of Educ. of N.C., 6 F.3d 160, 172 (4th Cir. 1993) (Wilkinson, J., dissenting) (adopted as majority opinion en banc, 21 F.3d 49, 51 (4th Cir. 1994) (per curiam)). Because the catalyst theory advances one purpose of the Act at the expense of the other, it would distort the careful balance intended by the Legislature and should not be read into the meaning of “prevailing party.” See Matter of N.Y. State Clinical Lab Ass’n, 85 N.Y.2d at 354; Rodriguez v. United States, 480 U.S. 522, 526 (1987) (per curiam) (“Deciding what competing values 55 will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice—and it frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute’s primary objective must be the law.” (emphasis in original)). The catalyst theory would also visit substantial burdens on the courts, state agencies, and ultimately the taxpaying public that were never intended by the Legislature. Courts would be substantially burdened by the increased filing of meritless cases: the catalyst theory “provides incentives for filing marginal, even frivolous, lawsuits” because “[a]ny change in conduct by the defendant, for whatever reason, may offer a promising payout to attorneys who file a complaint, whether or not that complaint has any ultimate legal merit.” S-1 and S-2, 6 F.3d at 172 (Wilkinson, J., dissenting) (adopted as majority opinion en banc, 21 F.3d at 51). Courts would also be burdened by a decrease in settlements and other out-of-court resolutions, because defendants would have incentives to resist making voluntary changes once an action is 56 commenced and instead litigate to avoid a catalyst-fee award. See Buckhannon, 532 U.S. at 608. Courts would also be burdened by having to conduct catalyst-theory hearings to sort through potentially difficult legal and factual questions—what the Supreme Court has described as “a second major litigation” in each case, Buckhannon, 532 U.S. at 609 (quotation marks omitted). They would have to address, for example, the degree of merit to plaintiff’s underlying claims, the degree to which the lawsuit was the cause of the defendant’s change of conduct, and whether the defendant’s motivation was the plaintiff’s threat of victory or the threat of expense. Id. at 610. And plaintiffs’ attorneys would have strong incentives to prolong the hearings to further drive up their own fee awards. Finally, state fee liability would increase, which may ultimately harm taxpayers in general and the low-income recipients of government services in particular. Awards of attorney’s fees under the New York EAJA are paid out of state agency budgets. Budget Report on Bills, reprinted in Bill Jacket for ch. 36 (1992), at 7. As a result, any increase in awards 57 resulting from the catalyst doctrine will have to be funded by some combination of increases in agency budgets and cuts in agency services, burdening both the taxpaying public and the very individuals the agencies serve. See Perdue v. Kenny A., 559 U.S. 542, 559 (2010) (“[B]ecause state and local governments have limited budgets, money that is used to pay attorney’s fees is money that cannot be used for programs that provide vital public services.”). C. The Legislature Is Best Equipped to Decide Whether the Catalyst Theory is Good Policy. To be sure, reasonable minds can differ about whether the catalyst theory is good policy—as the majority and dissenting opinions in both Buckhannon and the decision below illustrate. But the Court need not resolve the merits of catalyst fees as a policy matter to conclude that the Legislature, and not the Judiciary, is the branch of government best equipped to address the issue and, if necessary, adopt the catalyst theory. The Legislature can gather data and consider the perspectives of state agencies, legal services organizations, members of the bar, consumers of legal services, and other 58 interest groups. See F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 131 (1974). Using that information, it can weigh the policy arguments for and against the catalyst theory, make predictions about the effects of authorizing catalyst fees, make finely calibrated adjustments to the law to attempt to mitigate any possible deleterious effects, and ultimately decide whether the tradeoffs between access to justice and state liability are worthwhile. Several legislatures throughout the country, including the New York City Council, have demonstrated that they are capable of expressly enacting catalyst-fee provisions. In 2005, the Council responded to Buckhannon by amending the City Human Rights Law’s definition of “prevailing party” to include “a plaintiff whose commencement of litigation has acted as a catalyst to effect policy change on the part of the defendant, regardless of whether that change has been implemented voluntarily, as a result of a settlement or as a result of a judgment in such plaintiff's favor.” N.Y. City Admin. Code § 8-502(f). Other jurisdictions have enacted similar provisions. 740 Ill. Comp. Stat. § 23/5 (defining prevailing party to 59 include a party “whose pursuit of a non-frivolous claim was a catalyst for a unilateral change in position by the opposing party relative to the relief sought”); 110 Ill. Comp. Stat. § 13/5 (same); Anderson, California Code of Ordinances § 8.29.060(B) (conferring prevailing- party status if a lawsuit “was the catalyst motivating the defendant to provide the primary relief sought” and “was meritorious and achieved its result by ‘threat of victory,’” and the party “reasonably attempted to settle the litigation before filing the lawsuit”).11 Furthermore, the Legislature has recently demonstrated that it will act if it disagrees with this Court’s interpretation of a fee provision. For example, after the Court held that an objector to a class settlement is ineligible for attorney’s fees because the statute authorizes fees only for “the representatives of the class,” C.P.L.R. 909; Flemming v. Barnwell Nursing Home & Health Facilities, Inc., 15 N.Y.3d 375, 380 (2010), the Legislature 11 Legislatures are also capable of enacting fee provisions that go well beyond even the catalyst theory. For example, Congress considered but ultimately rejected a draft of the federal EAJA that would have permitted the award of fees to losing parties “in the interest of justice.” Ruckelshaus, 463 U.S. at 684. 60 promptly amended the statute to authorize fees for “any other person that the court finds has acted to benefit the class,” Ch. 566, § 1, 2011 McKinney’s N.Y. Laws 1492, 1492.12 Here, the New York EAJA has operated without the catalyst theory for over a decade—since Matter of Wittlinger and Matter of Auguste were decided in 2001. The Legislature is clearly aware of the issue: in three recent legislative sessions, it has considered and rejected proposals that would have enacted the catalyst theory. A catalyst-fee amendment is, moreover, currently pending in the Senate. See supra at 17-18. Until the Legislature actually passes a catalyst-fee statute, this Court should interpret the Act in a manner consistent with its text, history, purposes, and the last decade of lower-court precedent—by rejecting the catalyst theory. 12 Similarly, after this Court held that the New York City Human Rights Law should follow the Supreme Court’s decision in Farrar because there was no legislative intent for local law to depart from its federal analogue, McGrath, 3 N.Y.3d at 433-34, the City Council amended the law to explicitly state that it “shall be construed liberally for the accomplishment of the uniquely broad and remedial purposes thereof, regardless of whether federal or New York State civil and human rights laws, including those laws with provisions comparably-worded to provisions of this title, have been so construed,” N.Y. City Admin. Code § 8-130. 61 POINT II THE CATALYST THEORY DOES NOT APPLY WHEN THE LAWSUIT DOES NOT CHANGE THE STATE’S POSITION Even if the Legislature had incorporated the catalyst theory into the New York EAJA (and it did not), petitioner would not be entitled to fees because she did not satisfy the catalyst test. While the federal courts adopted different tests for catalyst-fee awards prior to Buckhannon, one essential element that they agreed upon was that the lawsuit cause a “change in conduct” by the defendant. 532 U.S. at 609-10; accord id. at 628 (Ginsburg, J., dissenting). Solla would not qualify as a prevailing party under the catalyst theory because her lawsuit did not catalyze a change in the State’s position. Petitioner commenced this proceeding in the hopes of compelling the State to “enforce compliance” by the City with OTDA’s decision after fair hearing (R. 26). Federal courts have entertained analogous lawsuits in which plaintiffs sought to have the federal government enforce compliance by noncompliant third parties. Those decisions hold that to satisfy the catalyst test under 62 the federal EAJA, the plaintiff’s suit must prompt a change in position by the federal government rather than by a third party. Idaho Conservation League, Inc. v. Russell, 946 F.2d 717, 721 (9th Cir. 1991) (suit must prompt change or action by “[t]he party from which plaintiffs seek their fees and costs”) (applying federal EAJA precedent to Clean Water Act fee provision). Thus, if the federal government already “sought [the third party’s] compliance” prior to filing of the suit, catalyst fees were not warranted. Omaha Tribe of Neb. v. Swanson, 736 F.2d 1218, 1221 (8th Cir. 1984). In the leading case establishing these basic principles, a city was the recipient of funds under a federal block grant program administered by the U.S. Department of Housing and Urban Development (HUD). The plaintiffs sued the city and HUD for the city’s failure to comply with certain requirements of the federal program. After the parties settled the case, the plaintiffs were denied prevailing-party status under the catalyst theory because the lawsuit did not cause any change in HUD’s position. While HUD “may have moved more slowly”—and less “aggressively”— than the plaintiffs wanted prior to the lawsuit, the federal agency 63 nevertheless had sought the city’s compliance “all along,” i.e., since before the suit. Citizens Coal. for Block Grant Compliance, Inc. v. City of Euclid, 717 F.2d 964, 967 (6th Cir. 1983) (quotation marks omitted); accord Heeren v. City of Jamestown, 39 F.3d 628, 631 (6th Cir. 1994) (denying prevailing-party status where only the city, but not the federal agency, “changed its behavior in response to plaintiff’s lawsuit”). Applying these holdings to the New York EAJA, Solla is not a prevailing party against the State in this case. Since before the commencement of this article 78 proceeding, the State has consistently sided with Solla regarding HRA’s reduction of her shelter allowance. First, OTDA issued a decision after fair hearing agreeing that the reduction was erroneous and directing HRA to retroactively restore the benefits (R. 39-40). Then when Solla submitted a request for compliance, OTDA inquired with HRA and was given a report that it had complied (R. 42). In these circumstances, in which OTDA consistently sought the same result Solla did since before she filed her petition, the lawsuit did 64 not cause any change in the State’s position—the suit cannot be said to have had a catalytic effect on the State. Nor do the policy arguments typically invoked by federal courts in support of the catalyst theory apply here. Delays in the restoration of benefits, as occurred here, “are all but unavoidable given the high volume of . . . recipients and the difficulty of keeping records relating to thousands of recipients.” Wittlinger, 99 N.Y.2d at 433. While regrettable, such delays are not “so intolerable” that they cry out for aggressive enforcement by private attorneys general and counsel compensated with taxpayer- funded catalyst fees. See id. Furthermore, given that Solla’s benefits were restored less than three weeks after commencement of this suit, the worst that can be said about the City is that it acted promptly and diligently once it was able to cut through the “bureaucratic red tape” and focus on petitioner’s case. See id. at 432. That response by the City, and the State’s consistent position, are a far cry from the “eleventh hour,” fee-avoiding “strategic maneuvers” that the catalyst theory was designed to combat. 65 Buckhannon, 532 U.S. at 636 n.10 (Ginsburg, J., dissenting) (quotation marks omitted). Permitting catalyst fees in delayed-compliance cases like this one would, moreover, give rise to the serious “potential for abuse” (R. 177 [Sweeny, J., dissenting]). The catalyst theory “provides incentives for filing marginal, even frivolous, lawsuits” because attorneys may receive a “promising payout” for simply filing a complaint. S-1 and S-2, 6 F.3d at 172 (Wilkinson, J., dissenting) (adopted as majority opinion en banc, 21 F.3d at 51). Thus, catalyst fees will give counsel a strong incentive to race to the courthouse to file an article 78 proceeding as soon as there is even the slightest delay in the City’s compliance with the State’s order. After all, once the petition is filed, there is a possibility that any subsequent compliance by the City might be deemed to have been catalyzed by the suit—perhaps even if compliance “was already in the works” (R. 176 [Sweeny, J., dissenting]). Indeed, the facts of this case illustrate the risk of potentially unnecessary lawsuits. When petitioner’s counsel informed OTDA that HRA had not yet complied with the decision after fair 66 hearing, OTDA promptly inquired and received a report from HRA confirming that it had complied—a report that OTDA had no reason to doubt. Despite OTDA’s responsiveness to her initial inquiry, Solla filed an article 78 petition just over a month later rather than simply contacting OTDA a second time—even though that step might have obviated the need for a lawsuit. If the catalyst test were deemed satisfied in these circumstances, lawyers would have a strong incentive to file suit precipitously to collect fees. Nor is the possibility that the State ultimately might not be liable for fees in delayed-compliance cases—because the State’s position might be deemed substantially justified or a fee award might be deemed unjust13—a sufficient safeguard against the mischief of the catalyst theory. The State would still have to make, and courts would still be required to hear and rule on, highly fact-specific arguments in each case about whether the catalyst test has been satisfied, whether the State’s position was 13 See C.P.L.R. 8601(a); Wittlinger, 99 N.Y.2d at 432-33; Matter of Priester v. Dowling, 231 A.D.2d 638, 639 (2d Dep’t 1996); Matter of Riley v. Dowling, 221 A.D.2d 446, 447 (2d Dep’t 1995); Matter of Scirica v. Bane, 216 A.D.2d 304, 305-06 (2d Dep’t 1995). 67 substantially justified, and whether fees would be unjust—placing “an undue burden on an already thinly stretched judiciary and overburdened agency” (R. 177 [Sweeny, J., dissenting]). That result is compelled by neither the New York EAJA nor federal case law applying the catalyst theory under the federal EAJA. 68 CONCLUSION For the foregoing reasons, this Court should reverse the Appellate Division’s decision and order. Dated: New York, New York February 21, 2014 BARBARA D. UNDERWOOD Solicitor General CECELIA C. CHANG Special Counsel to the Solicitor General WON S. SHIN Assistant Solicitor General of Counsel Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellant By: ____________________________ WON S. SHIN Assistant Solicitor General 120 Broadway New York, NY 10271 (212) 416-8808 Reproduced on Recycled Paper