In the Matter of Luz Solla, Respondent,v.Elizabeth Berlin, Appellant, et al., Respondents.BriefN.Y.January 15, 2015To be argued by: Peter A. Kempner, Esq. No. APL-2013-00224 20 minutes requested Supreme Court, New York County, Index No. 401178/2011 Court of Appeals State of New York In the Matter of the Application of LUZ SOLLA, Petitioner-Respondent, 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 PETITIONER-RESPONDENT DANIEL BARKLEY, Of Counsel MEGHAN FAUX, ESQ. CATHERINE F. BOWMAN, Of Counsel SOUTH BROOKLYN LEGAL SERVICES EDWARD JOSEPHSON, Of Counsel 105 Court Street, 4 th Floor PETER A. KEMPNER, Of Counsel Brooklyn, NY 11201 (718) 237-5574 (phone) (718) 855-4189 (facsimile) Attorneys for Petitioner-Respondent Dated: April 3, 2014 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES…………………………………………………...…iii PRELIMINARY STATEMENT …………………………………………………..1 QUESTIONS PRESENTED ………………………………………………………3 STATEMENT OF THE CASE ……………………………………………………4 A. Relevant Law Concerning Fair Hearing Compliance and the Equal Access to Justice Act……………………………………………….…4 1. New York’s Fair Hearing Process …………………………………...4 2. New York’s Equal Access to Justice Act……………………………..6 B. Factual Background and Procedural History…………………….…...9 C. Interpretation of the New York EAJA………………………………13 ARGUMENT……………………………………………………………………..18 POINT I - THE LEGISLATURE INTENDED TO EMBRACE THE CATALYST THEORY IN THE NEW YORK EQUAL ACCESS TO JUSTICE ACT………………………………………………………18 A. The Legislature’s Reference in the New York EAJA to Federal Case Law that “Has Evolved” Demonstrated its Intent to Incorporate the Catalyst Theory into State Law.………………………………………………….19 B. The Legislature’s Failure to Exclude the Catalyst Theory from the EAJA, While Diverging from Federal Law in Other Ways, Indicates an Intent to Include It…………………………………………………………….….24 C. The Use of the Terms “Prevailing Party” and “Final Judgment” in the New York EAJA Contemplate the Catalyst Theory……………..……..30 ii POINT II - THE APPELLATE DIVISION CORRECTLY EFFECTUATED THE POLICY GOALS UNDERLYING THE NEW YORK EQUAL ACCESS TO JUSTICE ACT………………………………………..36 POINT III - THE LEGISLATURE’S FAILURE TO AMEND THE EQUAL ACCESS TO JUSTICE ACT IS NOT INSTRUCTIVE ABOUT THE ORIGINAL INTENT OF THE ACT………………………………..41 POINT IV - APPELLANT OFFERS NO JUSTIFICATION FOR THEIR INACTION AND THIS PROCEEDING CLEARLY CHANGED THEIR POSITION………………………………………………..…44 CONCLUSION…………………………………………………………………...50 iii TABLE OF AUTHORITIES Page(s) SUPREME COURT CASES Barrett v. United States, 423 U.S. 212 (1976) .........................................................22 Bragdon v. Abbott , 524 U.S. 624 (1998) .......................................................... 31,32 Buckhannon Board and Home Care v. W.V. Dep’t of Health and Human Resources, 532 U.S. 598 (2001) ...................................................................... passim Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994) .......................................................................................................................43 Hensley v. Eckerhart, 461 U.S. 424 (1983) ...................................................... 26, 33 Hewitt v. Helms, 482 U.S. 755 (1987) .....................................................................20 J & J Anderson, Inc. v. Erie, 767 F.2d 1469 (10th Cir. 1985) ................................20 Johnson v. Transportation Agency, Santa Clara Cty., 480 U.S. 616 (1987) .........42 NLRB v. Plasterers’ Local Union No. 79, 404 U.S. 116 (1971) .............................41 Patterson v. McLean Credit Union, 491 U.S. 164 (1989) .......................................43 Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633 (1990) .....................41 Pierce v. Underwood, 487 U.S. 552 (1988) ..................................................... passim United States v. Craft, 535 U.S. 274 (2002) ............................................................41 FEDERAL CASES American Constitutional Party v. Munro, 650 F.2d 184 (9th Cir. 1981) ................20 Bonnes v. Long, 599 F.2d 1316 (4th Cir. 1979).......................................................20 iv Calderon-Cardona v. JP Morgan Chase Bank, N.A., 2011 WL 6155987 (S.D.N.Y. 2011) ........................................................................................................................22 Citizens Against Tax Waste v. Westerville City School Dist. Bd. of Ed.,985 F.2d 255 (6th Cir. 1993) ...................................................................................................20 Dobrova v. Holder, 607 F. 3d 297 (2d Cir. 2010) ...................................................22 Doe v. Busbee, 684 F.2d 1375 (11th 1982) .............................................................20 Gerena–Valentin v. Koch, 739 F.2d 755 (2d Cir. 1984) ..........................................20 Grano v. Barry, 783 F.2d 1104 (D.C. Cir. 1986). ...................................................20 Institutionalized Juveniles v. Sec’y of Pub. Welfare, 758 F.2d 897 (3d Cir. 1985) .20 J&J Anderson Inc. v. Erie, 767 F.2d 1469 (10th Cir. 1985) ...................................20 Nadeau v. Helgemoe, 581 F.2d 275 (1st Cir. 1978) ................................................20 Robinson v. Kimbrough, 652 F.2d 458 (5th Cir. 1981) ...........................................20 Stewart v. Hannon, 675 F.2d 846 (7th Cir. 1982) ...................................................20 Williams v. Miller, 620 F.2d 199 (8th Cir. 1980) ....................................................19 STATE CASES Apollon v. Giulianii, 246 A.D.2d 130, 136 (1st Dep’t 1998) ..................................46 Auguste v. Hammons, 285 A.D.2d 417 (1st Dep’t 2001) ............... 12, 13, 15, 16, 42 Barnett v. N.Y. State Dep’t. of Soc. Servs., 212 A.D.2d 696 (2d Dep’t 1995) ........46 Centennial Restorations Co. v. Abrams, 202 A.D.2d 721 (3d Dep’t 1994) ............14 Concern, Inc. v. Pataki, 2005 WL 1310478 (N.Y. Sup. Ct. 2005) .........................22 Diaz v. Franco, 257 A.D.2d 449 (1st Dep’t 1999) ..................................................14 In re Estate of Florio, 26 Misc. 3d 1048 (Nassau County Sur. Ct. 2009) ...............22 v In re Schacht, 20 A.D.2d 507, 248 N.Y.S.2d 65 (3d Dept. 1964) .................... 29, 30 Long v. Adirondack Park Agency, 76 N.Y.2d 416 (1990) .......................................37 Matter of Dandomar Co., LLC v. Town of Pleasant Valley Town Bd., 86 A.D.3d 83 (2d Dep’t 2011). .......................................................................................................21 N.Y. State Ass’n of Life Underwriters, Inc. v. N.Y. State Banking Dep’t, 83 N.Y.2d 353 (1994) ................................................................................................................41 N.Y. State Clinical Lab. Ass’n, Inc. v. Kaladjian, 85 N.Y.2d 346 (1995) .... passim Patrolmen's Benevolent Ass’n of City of N.Y. v. City of New York, 41 N.Y.2d 205 (1976) .......................................................................................................................18 Rocovich v. Consol. Edison Co., 78 N.Y.2d 509 (1991) .........................................36 Shvartszayd v. Dowling, N.Y.L.J., June 26, 1995 at p. 28, col. 5 (Sup. Ct. N.Y. County), aff'd, 239 A.D.2d 104 (1st Dep’t 1997) ....................................... 13, 14, 43 Simpkins v. Riley, 193 A.D.2d 1009 (3d Dep’t 1993). ............................................48 Thomasel v. Perales, 78 N.Y.2d 561 (1991) ...........................................................34 Tormos v. Hammons, 259 A.D.2d 434 (1st Dep’t 1999) ........................................... 5 Wittlinger v. Wing, 289 A.D. 2d 171 (1st Dep’t 2001) ..................................... 15, 16 Wittlinger v. Wing, 99 N.Y. 2d 425 (2003) ................................................. 16, 45, 47 OTHER STATE CASES DeSalvo v. Bryant, 42 P.2d 525 (Alaska 2002)..................................................... 32 Graham v. DaimierChrysler Corporation, 34 Cal.4th 553 (2004) ……………………………………………………..…….32 Mason v. City of Hoboken, 196 N.J. 51, 951 A.2d 1017 (2008)…………..…… 32 Solebury Township Department of Environmental Protection, 593 Pa. 146 (2007)………………………………………………………………36 vi FEDERAL STATUTES 28 U.S.C. § 2412(d) ................................................................................ 7, 19, 26, 33 42 U.S.C. §1988 .......................................................................................... 14, 20, 34 STATE STATUTES 18 N.Y.C.R.R. § 358-6.1(b) ....................................................................................... 5 18 N.Y.C.R.R. § 358-6.4 ........................................................................ 5, 10, 12, 49 C.P.L.R Article 78 ............................................................................................ passim C.P.L.R. § 8600 ................................................................................................ passim C.P.L.R. § 8601(a) ........................................................................................ 7, 25, 44 C.P.L.R. § 8601(b) ...............................................................................................8, 33 C.P.L.R. § 8602(b) ...................................................................................................44 C.P.L.R. § 8602(c) .................................................................................. 8, 26, 33, 34 C.P.L.R. § 8602(d) ............................................................................................ 25, 30 C.P.L.R. § 8602(e) ..................................................................................................... 8 C.P.L.R. § 8602(f) ............................................................................................ passim New York Statutes § 92 ...........................................................................................30 New York Social Services Law § 21(1) .................................................................... 6 New York Social Services Law § 22(1) .................................................................... 4 New York Social Services Law § 22(9)(a) ................................................................ 4 vii MISCELLANEOUS A. 2068, 236th Sess. (2013) .....................................................................................41 A. 3264, 234th Sess. (2011) .....................................................................................41 A. 7395, 232d Sess. (2009) ......................................................................................41 Black’s Law Dictionary 1240 (5th ed. 1979) ................................................... 28, 31 Governor's Approval Mem., Bill Jacket, L. 1989, ch. 770, reprinted in 1989 NY Legis. Ann. 336 ............................................................ passim H.R. Rep. No. 96-1418, at 11 (1980) .......................................................................19 Merriam-Webster’s Collegiate Dictionary [11 th ed 2004] ................................ 24, 31 S. 713, 236th Sess. (2013) .......................................................................................42 S. 15131, 234th Sess. (2011) ...................................................................................42 S. 4534, 232d Sess. (2009) .......................................................................................42 1 PRELIMINARY STATEMENT The Appellate Division of the Supreme Court in the First Judicial Department correctly held that attorneys’ fees are available under the New York State Equal Access to Justice Act (“EAJA”) under a catalyst theory. The decision below held that the New York State Legislature intended for fees to be available in cases such as this one where the State was not substantially justified in its position and where the petition was clearly the catalyst for the State’s actions after the filing of the case, which were effectuated without a court order or written settlement. This case concerns the New York City Human Resources Administration’s (“City respondent” or “HRA”) failure to comply with a Decision after Fair Hearing issued by the New York State Office of Temporary and Disability Assistance (“appellant” or “OTDA”), and the unjustified refusal of OTDA to enforce compliance with its Decision after Fair Hearing. Petitioner-Respondent Luz Solla (“petitioner” or “Ms. Solla”) was left with no choice but to file an Article 78 proceeding in New York County Supreme Court in order to get the respondents’ “attention after being ignored for months.” (R. 14). After the filing of this Article 78 proceeding, respondents finally complied with the Decision after Fair Hearing. The Supreme Court then dismissed petitioner’s Article 2 78 as moot and further denied her request for counsel fees pursuant to Article 86 of the C.P.L.R. even though it found that the Article 78 petition was “undoubtedly” the catalyst for the respondents actions and that the respondents’ actions were the “result of . . . filing” the Article 78 petition. (R. 14). Petitioner sought review of the Supreme Court’s dismissal by the Appellate Division of the Supreme Court in the First Judicial Department, contending that because her Article 78 petition catalyzed the respondents’ ultimate compliance with her favorable Decision after Fair Hearing, she was the prevailing party in the litigation below and there was no substantial justification nor special circumstances which would make the awarding of counsel fees to her unjust. The Appellate Division reversed the lower court’s ruling and held that the EAJA entitles Ms. Solla to counsel fees, as she was the prevailing party to this litigation, the position of the state was not substantially justified, and no special circumstances make the awarding of fees unjust (R. 143-179). The Appellate Division ruled that the New York EAJA does not require a court order or judicially enforceable stipulation in order for a movant to be considered a prevailing party and therefore entitled to counsel fees. That ruling, which is the subject of this appeal, found that there is no evidence that the New York State Legislature intended to exclude the award of attorneys’ fees under the catalyst theory and that the legislative intent was to follow the significant body of 3 case law which had developed under the Federal Equal Access to Justice Act, which had embraced the catalyst theory at the time the New York Equal Access to Justice Act was passed (R. 147-148). The Appellate Division’s decision should be upheld, as it is consistent with both the legislative history and the plain language of the statute. QUESTIONS PRESENTED 1. Does Appellants’ compliance with the Decision after Fair Hearing in response to the filing of the proceeding below, prior to entry of a judicial order, deprive the petitioner of her entitlement to counsel fees under the Equal Access to Justice Act even where appellants’ actions were not substantially justified and there are no special circumstances under which an award would be unjust? The Appellate Division First Department answered this question in the negative. 2. Does Appellant’s belated enforcement of its Decision after Fair Hearing after previously refusing to take action constitute a change in position as required by the Equal Access to Justice Act? This argument was not raised below and therefore the Appellate Division did not speak to this issue. The petitioner submits that the answer is yes. 4 STATEMENT OF THE CASE This appeal poses the question whether the New York State Legislature intended to embrace the catalyst theory in the New York Equal Access to Justice Act when it declared that the act should follow the significant body of case law that had evolved under the Federal Equal Access to Justice Act at the time the state statute was passed. This appeal also concerns the question of whether the appellant changed its position in response to the filing of this litigation. First we will briefly describe the law concerning compliance with Decisions after Fair Hearing and the Equal Access to Justice Act and then we will turn to the facts and procedural history of the case. A. Relevant Law Concerning Fair Hearing Compliance and the Equal Access to Justice Act 1. New York’s Fair Hearing Process New York Social Services Law § 22(1) sets forth the state agency’s obligation to provide fair hearings to appeal agency determinations. Pursuant to Social Services Law § 22(9)(a), all decisions of the commissioner are binding upon the social services districts, and social services officials are required to comply with these decisions. 5 Chapter 18 of the New York Codes, Rules and Regulations § 358-6.1(b) provides that, upon issuance, a fair hearing decision is final and binding upon social services agencies and must be complied with in accordance with § 358-6.4. Chapter 18 of the New York Codes, Rules and Regulations § 358-6.4(a) provides that for all fair hearing decisions, except those involving food stamp issues only, definitive and final administrative action must be taken promptly, but in no event more than ninety days from the date of the request of the fair hearing. 18 N.Y.C.R.R. § 358-6.4(c) provides that, upon receipt of a complaint that a social services agency has not complied with a fair hearing decision, the state department of social services will secure compliance by whatever means is deemed necessary and appropriate under the circumstances of the case. The plain language of the regulation instructs the appellant to actually take action in response to a compliance complaint and not simply trust in the information provided by the local social services agency. “State social service agencies have complete supervisory authority over the local departments . . . the ultimate power and responsibility in this administrative scheme lies with State DSS, imposing responsibility for attorneys’ fees on the State DSS takes this structure into account and avoids evasion of responsibility by bureaucratic fingerpointing and red-tape shufflings.” Tormos v. Hammons, 259 A.D.2d 434, 435-436 (1st Dep’t 1999) (internal quotations and citations omitted). 6 The appellant has the independent capability to verify whether local departments of social services have complied with fair hearing decisions. OTDA has designed and implemented a computerized welfare management system (“WMS”) which is capable of receiving, maintaining and processing information relating to persons who have applied for or been determined eligible for benefits under any program for which OTDA has supervisory responsibilities. The WMS provides individual and aggregate data to local social services districts to assist them in making eligibility determinations and basic management decisions, and provides data to OTDA to assist it in supervising the local administration of such programs. See S.S.L. § 21(1). 2. New York’s Equal Access to Justice Act The New York State Equal Access to Justice Act, C.P.L.R. § 8600 et. seq., authorizes “the recovery of counsel fees and other expenses in certain actions against the State of New York.” C.P.L.R. § 8600. The statute was enacted 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.” N.Y. State Clinical Lab. Ass’n, Inc. v. Kaladjian, 85 N.Y.2d 346, 351(1995) (citing Governor’s Approval Mem, L 1989, ch 770 at 336). As the court below held, “[t]he ‘spirit and purpose’ of the State EAJA are clear. The Legislature 7 desired to level the playing field for those without the necessary resources to challenge State action through litigation.” (R. 151). C.P.L.R. § 8600 states that the intent of the New York Equal Access to Justice Act was to create a state “mechanism authorizing the recovery of counsel fees …similar to the provisions of federal law contained in 28 U.S.C. § 2412(d) and the significant body of case law that has evolved thereunder.” “Four requirements must be met before a court can award fees to a private litigant under the Federal EAJA: (1) the claimant must demonstrate that it is an eligible party under the statute; (2) the claimant must be a ‘prevailing party’; (3) the Government's position must not be ‘substantially justified’; and (4) there must not exist any special circumstances that would make an award unjust.” Kaladjian at 352 (internal citations omitted). C.P.L.R. § 8601(a) provides in pertinent part that: except as otherwise specifically provided by statute, a court shall award to a prevailing party, other than the state, fees and other expenses incurred by such party in any civil action brought against the state, unless the court finds that the position of the state was substantially justified or that special circumstances make an award unjust. C.P.L.R. § 8601(a) also instructs that “whether the position of the state was substantially justified shall be determined solely on the basis of the record before the agency or official whose act, acts, or failure to act gave rise to the civil action.” “The legislative history of the State EAJA indicates that New York courts should 8 look to the Pierce decision when determining whether the State’s position was ‘substantially justified.’ (see, Assembly Mem, 1989 NYLegisAnn, at 335 [“The test of whether or not a government action is substantially justified is essentially one of reasonableness. Where the government can show that its case had a reasonable basis both in law and fact, no award will be made”]; Governor's Approval Mem, op. cit., 1989 NY Legis Ann, at 336.” New York State Clinical Laboratory Ass'n v. Kaladjian, 85 N.Y.2d 346, 356, 625 N.Y.S.2d 463, (1995) referring to Pierce v. Underwood, 487 U.S. 552, 564, (1988). C.P.L.R. § 8601(b) authorizes an application for fees “within 30 days of final judgment.” C.P.L.R. § 8602(c) defines the term “final judgment” as “a judgment that is final and not appealable, and settlement.” C.P.L.R. § 8602(e) defines the term “position of the state” as “the act, acts or failure to act from which judicial review is sought.” C.P.L.R. § 8602(f) defines the term “prevailing party” as “a plaintiff or petitioner in the civil action against the state who prevails in whole or in substantial part where such party and the state prevail upon separate issues.” 9 B. Factual Background and Procedural History The facts of this proceeding are not in dispute. Petitioner-Respondent LUZ SOLLA resides in Brooklyn, N.Y., and is a recipient of public assistance under the Family Assistance program administered by New York City’s Human Resources Administration. (R. 39). On September 16, 2010, City respondents issued a Notice that reduced Ms. Solla’s “Restricted shelter payment” from $1,390.98 per month to $1,181.98 per month. (R. 101-108). This reduction in benefits forced Ms. Solla to use her disabled daughter’s Supplemental Security Income (SSI) benefits to pay a portion of the rent, thereby diverting those funds from the care of her disabled child. Petitioner promptly appealed this erroneous determination, and on November 29, 2010, the New York State Office of Temporary and Disability issued a Decision after Fair Hearing that ordered City respondents to withdraw its September 16, 2010, Notice of Intent and restore any benefits to Ms. Solla’s case retroactive to the date of the agency’s actions. (R. 109-112). The decision and order states: The determination of the agency to reduce the Appellant’s Public Assistance benefits (including emergency shelter allowance) is not correct and is reversed. 1. The Agency is directed to withdraw its Notice of Intent dated September 16, 2010, with respect to Appellant’s Public Assistance benefits. 10 2. The Agency is directed to continue to provide Public Assistance benefits to the Appellant. 3. The Agency is directed to restore Appellant’s Public Assistance benefits retroactive to the date of the Agency action. Should the Agency in the future determine to implement its previous action, it is directed to produce and review the Appellant’s case record, to issue a new Notice of Intent and to produce the complete relevant case record at any subsequent fair hearing. As required by 18 NYCRR 358-6.4, the Agency must comply immediately with the directives set forth above. (R. 111-112). The City respondents refused to comply with the Decision after Fair Hearing and failed to withdraw the September 6, 2010, Notice of Intent or to issue the retroactive benefits owed in the required timeframe. Ms. Solla’s restricted shelter payment remained at $1,181.98 per month. On March 28, 2011, Ms. Solla’s counsel notified the OTDA Compliance Unit of the failure of the City respondents to comply. (R. 41). The OTDA Compliance Unit received the complaint, but no compliance was obtained. OTDA’s Office of Administrative Hearings replied to the Request for Compliance in a letter dated March 30, 2011. The letter alleges that City respondents had complied with the decision’s directives. (R. 42). The full text of the March 30, 2011, letter reads as follows: 11 We have received a report from the New York City Department of Family Assistance regarding compliance with the above referenced fair hearing decision. A review of that report, the fair hearing decision and your original complaint confirms that the local Department of Family Assistance has taken appropriate action to comply with the decision’s directives. We are therefore regarding this matter as satisfactorily resolved. (R. 42). This was a completely false statement. It is undisputed that no action was taken by City respondents to comply with the decision’s directives. This response to the compliance complaint stonewalled efforts by Ms. Solla and her counsel to obtain the relief to which she was entitled under the Decision after Fair Hearing. Because its efforts to obtain compliance with the Decision after Fair Hearing had completely failed, South Brooklyn Legal Services – a small not-for-profit law office, saw no other choice but to file an Article 78 proceeding in New York County Supreme Court. On or about May 6, 2011, after over five months of non-compliance, Ms. Solla commenced this Article 78 proceeding seeking an order enforcing compliance with the State respondent’s Decision after Fair Hearing and directing City respondents to restore to her any benefits lost during the period that she was budgeted incorrectly. In addition, Ms. Solla sought counsel fees pursuant to Article 86 of the C.P.L.R. (R. 20-28). 12 As a result of filing the Article 78 Petition, on May 20, 2011, City respondents finally issued all lost benefits and restored Ms. Solla’s benefits to the pre-reduction level. (R. 113-117). It was only after the filing of the Article 78 Petition that the appellant took its obligation under 18 N.Y.C.R.R. § 358-6.4 seriously and inquired into the status of the case in a genuine manner. The appellant concedes that on May 23, 2011, it finally reviewed the Welfare Management System printouts to confirm that retroactive benefits had been issued to Ms. Solla’s landlord and that her budget had been restored to pre- reduction levels. (R. 64-65). This is a clear change from the position OTDA took on March 30, 2011, when it insisted that the fair hearing had already been complied with – blindly relying on the statement of the City respondents and making no independent inquiry itself. (R. 42). Appellants then sought dismissal of the Article 78 proceeding as moot and sought a denial of counsel fees under the EAJA. In a decision dated July 12, 2011, the Supreme Court dismissed the Article 78 petition as moot and denied the application for fees pursuant to the EAJA. (R. 13-14). The lower court’s decision relied on the Appellate Division’s decision in Auguste v. Hammons, 285 A.D.2d 417 (1st Dep’t 2001), which held that, “since the Supreme Court did not issue an enforceable judgment on the merits of petitioner’s constitutional claims, there was no material alteration in the legal relationship of 13 the parties sufficient to support an award of fees.” Id. at 418 (citing Buckhannon Board and Home Care v. W.V. Dep’t of Health and Human Resources, 532 U.S. 598 (2001)). The Supreme Court, however, held that Ms. Solla’s “petition appears undoubtedly to have been the catalyst for HRA and HASA’s compliance; indeed, it appears that it was the only way left for her to get their attention after being ignored for months.” (R. 14). The Supreme Court went on to state that “it apparently took the filing of this Article 78 motion to get respondents’ attention after months of arbitrary delay…” (R. 13-14). The Supreme Court also noted that the Article 78 “was not moot when filed but was only rendered moot by actions taken by respondents as a result of the filing.” (R. 14). C. Interpretation of the New York EAJA Prior to the United States Supreme Court’s ruling in Buckhannon Bd. & Care Home, Inc. v. W.V.Dep’t of Health & Human Resources, 532 U.S. 598 (2001), New York Courts had upheld awards of counsel fees under the New York State EAJA based on the catalyst theory. For instance, in Shvartszayd v Dowling, N.Y.L.J., June 26, 1995 p. 28 col. 5 (Sup. Ct. N.Y. County), aff'd, 239 A.D.2d 104 (1st Dep’t 1997), the Appellate Division, First Department, affirmed the State appellant’s liability for payment of a 14 New York State EAJA fee award to an indigent petitioner when the court of original jurisdiction applied the “catalyst test” as follows: Respondents argue that petitioner is not a prevailing party because she has not secured a final judgment.... Respondents admit that pursuant to applicable case law it is not necessary for petitioner to have obtained relief solely through a final judgment. However, in order to be deemed a “prevailing party,” petitioner must show a causal connection between the ultimate relief obtained and the lawsuit in which the fees are sought (cite omitted). In order to establish the requisite causal nexus, a petitioner must demonstrate that his or her lawsuit was a “catalytic, necessary or substantial factor in obtaining the relief” (cites omitted). Shvartszayd v Dowling, N.Y.L.J., June 26, 1995 at p. 26, col. 5 (Sup. Ct. N.Y. County). Similarly, in Centennial Restorations Co. v. Abrams, 202 A.D.2d 721, 722 n.1 (3d Dep’t 1994), the Third Department held that “favorable settlements can be considered in the determination of whether a party has ‘prevailed.” Prior to Buckhannon, New York courts recognized the catalyst theory under federal law as well, construing state law and federal law in harmony. For example, in Diaz v. Franco, 257 A.D.2d 449 (1st Dep’t 1999), the First Department upheld an award of fees under 42 U.S.C. § 1988 after the municipal housing authority defendant belatedly approved the plaintiff’s application for public housing nine days after the lawsuit was filed. The court “decline[d] to accept respondents’ contention that the 15 institution of this proceeding was not a catalyst of respondent agency’s belated eligibility determination.” Id. at 450. It was not until the Appellate Division First Department applied the Buckhannon holding in Auguste v. Hammons, 285 A.D. 2d 417 (2001), that the catalyst theory was disavowed by New York courts. The analysis of the issue was brief and the catalyst theory was abandoned simply because it had “been recently rejected by the United States Supreme Court.” Id. at 418 (citations omitted). In discussing its prior ruling in Auguste, the Appellate Division below points out that “Auguste was briefed and argued … before Buckhannon was decided” and “the parties assumed that the catalyst theory applied to the State EAJA.” (R. 147). The Court acknowledged that as evidenced by their “lack of discussion of the issue in our short memorandum decision, it appears that this Court was not focused on the qualitative differences between the two statutes.” (R. 147). The Appellate Division First Department subsequently only cited to Auguste once since it was decided, in Wittlinger, until the instant matter was presented to the Court. While the Appellate Division First Department followed its ruling in Auguste in Wittlinger v. Wing, 289 A.D. 2d 171 (1st Dep’t 2001), stating that, “[t]he ‘catalyst theory’ upon which petitioner relies, is no longer a viable basis for an award of attorneys’ fees,” it again failed to analyze the legislative history, and relied simply on Auguste which relied on Buckhannon. Id. at 171 (citations 16 omitted). The holding in Wittlinger, moreover, was arguably dictum since the court also held that the state’s position was substantially justified. Id. As the Appellate Division states in this case below, fees would have been “denied regardless” in Wittlinger because “the State’s position was substantially justified.” (R. 147). On Wittlinger’s appeal, this Court explicitly declined to rule on the issue of whether the catalyst theory was still a viable basis for an award of counsel fees under the New York State EAJA. Wittlinger v. Wing, 99 N.Y. 2d 425 (2003). The Court of Appeals upheld the Appellate Division’s ruling in Wittlinger on the sole grounds that the actions of the appellant were substantially justified. This Court stated “[i]n light of our holding, we need not reach the ‘catalyst’ issue and Buckhannon’s impact on the interpretation of the New York Equal Access to Justice Act… we neither endorse nor repudiate the Appellate Division’s alternative holding as to the vitality of the catalyst theory in proceedings of this kind.” Id. at 433. Thus neither in Auguste nor in Wittlinger did the Appellate Division scrutinize the language and history of the New York EAJA and evaluate its relationship with the federal statute as interpreted by Buckhannon. However, in the case below, the Appellate Division, for the first time, entered into a “careful analysis and consideration” and “declined to follow Auguste.” (R. 147). This decision returned the New York Equal Access to Justice Act to the status quo of 17 awarding fees under the catalyst theory, reflecting the substantial body of federal case law which was in place when the New York act was promulgated. It was this existing line of case law that the New York Legislature explicitly instructed the courts to follow when promulgating the New York EAJA. The Appellate Division held below that “preservation of the catalyst theory is critical to achieving the legislative purpose behind the State EAJA.” (R. 165). Without the catalyst theory, “aggrieved but impecunious parties would be hard- pressed to find qualified attorneys to commence cases for them, since they would have no assurance of being compensated. It would be inconsistent with the laudatory goals of the State EAJA to interpret the legislation as depriving plaintiffs of attorneys’ fees simply because the State decided to concede its position.” (R. 166). 18 ARGUMENT The decision below correctly found that the text, history, and purpose of the New York Equal Access to Justice Act embraced the award of fees under the catalyst theory and should be upheld. Furthermore, this proceeding satisfies all elements of the act insofar as the appellants offer no substantial justification for their actions, present no special circumstances suggesting that an award of fees would be unjust, and changed their position regarding compliance with the Decision after Fair Hearing. This Article 78 achieved all its intended goals and Ms. Solla was rightly held to be the prevailing party. POINT I THE LEGISLATURE INTENDED TO EMBRACE THE CATALYST THEORY IN THE NEW YORK EQUAL ACCESS TO JUSTICE ACT The ultimate goal of the judicial interpretation of a statute is to give effect to the intent of the legislature. Patrolmen's Benevolent Ass’n of City of N.Y. v. City of New York, 41 N.Y.2d 205, 208 (1976). Both the construction and the language of the New York EAJA clearly indicate that the New York Legislature intended the use of the catalyst theory in the application of its EAJA. As the Appellate Division found, “There is no evidence to suggest that the New York State Legislature, in enacting the State EAJA, ever intended to eliminate attorneys’ fee awards under the catalyst theory. In fact, ample evidence supports the contrary conclusion.” (R. 147-148). 19 A. The Legislature’s Reference in the New York EAJA to Federal Case Law that “Has Evolved” Demonstrated its Intent to Incorporate the Catalyst Theory into State Law. Section 8600 of the C.P.L.R. expresses the Legislature’s intent to create a state “mechanism authorizing the recovery of counsel fees…similar to the provisions of federal law contained in 28 U.S.C. § 2412(d) and the significant body of case law that has evolved thereunder” (emphasis added). The New York EAJA’s incorporation of the federal case law “that has evolved” indicates an intent to import into the state statute the federal law as it was interpreted when the statute was enacted, including the catalyst theory. Although the Federal EAJA does not mention the catalyst theory, Congress clearly intended attorneys’ fees to be available without the necessity of a judicial decision. According to the Congressional Record, Congress intended that attorneys’ fees “should not be limited to a victor only after entry of a final judgment following a full trial on the merits.” H.R. Rep. No. 96-1418, at 11 (1980). For example, Congress intended that attorneys’ fees should also be available for a party “if he obtains a favorable settlement of his case, if the plaintiff has sought a voluntary dismissal of a groundless complaint, or even if he does not ultimately prevail on all issues.” Id. (citations omitted). The New York Legislature passed its EAJA approximately a decade after the passage of the Federal EAJA. During that decade, federal courts, including the 20 Second Circuit, consistently interpreted the Federal EAJA to include the catalyst theory. See, e.g., Nadeau v. Helgemoe, 581 F.2d 275 (1st Cir. 1978); Gerena– Valentin v. Koch, 739 F.2d 755 (2d Cir. 1984); Institutionalized Juveniles v. Sec’y of Pub. Welfare, 758 F.2d 897 (3d Cir. 1985); Bonnes v. Long, 599 F.2d 1316 (4th Cir. 1979); Robinson v. Kimbrough, 652 F.2d 458 (5th Cir. 1981); Citizens Against Tax Waste v. Westerville City School Dist. Bd. of Ed.,985 F.2d 255 (6th Cir. 1993); Stewart v. Hannon, 675 F.2d 846 (7th Cir. 1982); Williams v. Miller, 620 F.2d 199 (8th Cir. 1980); American Constitutional Party v. Munro, 650 F.2d 184 (9th Cir. 1981); J & J Anderson, Inc. v. Erie, 767 F.2d 1469 (10th Cir. 1985); Doe v. Busbee, 684 F.2d 1375 (11th Cir. 1982); Grano v. Barry, 783 F.2d 1104 (D.C. Cir. 1986). In 1987, the Supreme Court of the United States itself had acknowledged the applicability of the catalyst theory in federal fee-shifting statutes: It is settled law, of course, that relief need not be judicially decreed in order to justify a fee award under § 1988. A lawsuit sometimes produces voluntary action by the defendant that affords the plaintiff all or some of the relief he sought through a judgment- e.g., a monetary settlement or a change in conduct that redresses the plaintiff's grievances. When that occurs, the plaintiff is deemed to have prevailed despite the absence of a formal judgment in his favor. Hewitt v. Helms, 482 U.S. 755, 760-61 (1987). Because the federal courts had clearly and uniformly applied the catalyst theory under the Federal EAJA and the New York Legislature sought to draft a 21 statute “similar” to the federal EAJA, the New York Legislature, in referencing the case law that had evolved under the Federal EAJA, clearly intended to incorporate the catalyst theory into its own statute. The appellant suggests, without offering any supporting evidence, that because the New York EAJA does not mention the catalyst theory, the New York Legislature must not have been aware of it. Appellant’s Brief at 43. Thus the appellant argues that although the legislature chose very specifically to create a statute based on a federal statute and the case law that had evolved under it, the legislature did not actually know what that case law was. The appellant would have this Court believe that the legislature and the Governor were intimately aware of Pierce v. Underwood, 487 U.S. 552 (1988), and the impact that it had on the interpretation of the Federal EAJA, but were completely ignorant of the myriad federal cases approving attorneys’ fees under a catalyst test. This claim not only strains credibility, but also contradicts the “fundamental tenet of statutory construction that the Legislature is presumed to be aware of the law in existence at the time of an enactment, as well as the effect and implementation of its own enactments.” Matter of Dandomar Co., LLC v. Town of Pleasant Valley Town Bd., 86 A.D.3d 83, 92 (2d Dep’t 2011). Appellant also argues that the Legislature intended the EAJA to incorporate federal law not just as it existed at the time, but in any way it might develop at any 22 time in the future. Appellant’s argument depends on a strange and ungrammatical reading of the word “evolved,” removed from the complete verb phrase in the statute “as it has evolved.” Thus the appellant claims that 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.” Appellant’s Brief at 44. Of course, the use of the past tense, “evolved,” could never apply to a future time – the Legislature would have to have said “as it may evolve” or “as it evolves.” The New York Legislature, in utilizing the phrase “has evolved,” used the present perfect tense of the verb, a verb tense that refers to the past up until the present and does not contemplate the present into the future. “The present perfect tense refers to (1) a time in the indefinite past, or (2) a past action that comes up to and touches the present.” Calderon-Cardona v. JP Morgan Chase Bank, N.A., 2011 WL 6155987, * 4 (S.D.N.Y. 2011) (citing Dobrova v. Holder, 607 F. 3d 297, 301 (2d Cir. 2010). See also Barrett v. United States, 423 U.S. 212, 217 (1976) (“present perfect tense denotes an act that has been completed”); Concern, Inc. v. Pataki, 2005 WL 1310478, *21 n.10 (N.Y. Sup. Ct. 2005) (the present perfect tense is defined as “an action that has been completed at some indefinite time before the present time”); In re Estate of Florio, 26 Misc. 3d 1048, 1050 (Nassau County Sur. Ct. 2009) (“the present perfect tense …is generally used to refer to an action which began in the past and continues to the present”). 23 Contrary to the dissent’s argument below, there was nothing “convoluted” about the Legislature’s use of the present perfect tense to refer to events that had occurred up to the date of the statute’s enactment. (R. 171-172). Rather, the Legislature used the verb tense according to its established usage to express its intent that the Federal EAJA case law from 1980 to 1989 be incorporated into the New York EAJA, but that future control of its statute should not be ceded to subsequent federal interpretations of the Federal EAJA as they would later evolve. Appellants’ citation to N.Y. State Clinical Lab. Ass’n v. Kaladjian, 85 N.Y.2d 346, 352 (1995) on page 44 of their Brief is not to the contrary, since in that case the Court of Appeals cited to recent federal law for further interpretations consistent with the case law as it existed at the time of the EAJA’s enactment – specifically with Pierce v. Underwood, 487 U.S. 552 (1988), which the Legislature specifically intended to incorporate in the EAJA. Kaladjian does not suggest that federal decisions reversing law as it existed in 1989 should be read into the state statute. Appellants’ references to this court’s interpretation of other statutes, such as the Martin Act or the City Human Rights Law, are even less illuminating since those statutes do not contain the EAJA’s “as it has evolved” language. This understanding of the federal case law’s relation to the New York EAJA is made apparent by the legislative history and in particular by the Governor’s concern with Pierce, a Supreme Court case that narrowed the definition of the 24 phrase “substantially justified” from the definitions proposed by previous federal courts. 1 The Legislature clearly intended that the holding in Pierce be permanently incorporated into the statute, regardless of subsequent developments in the federal courts, and the same principle applies to the catalyst theory and other principles of federal EAJA jurisprudence as they had evolved up to the enactment of the state statute. B. The Legislature’s Failure to Exclude the Catalyst Theory from the EAJA, While Diverging from Federal Law in Other Ways, Indicates an Intent to Include It. To accomplish the intended purpose of the statute in a way that addressed certain concerns raised by the Governor, the Legislature fashioned a statute that was “similar” to the federal EAJA but departed from it in certain specified ways. N.Y. State Clinical Lab. Ass’n v. Kaladjian, 85 N.Y.2d 346, 352 (1995) (“although the State EAJA purports to be modeled after the Federal act, the Legislature departed from the Federal model in certain significant respects.”). Then-Governor Cuomo had three areas of concern. First, he sought “appropriate limits on the types of individuals and organizations that may recover attorney’s fees.” Governor's Approval Mem, L 1989, ch 770,1989 N.Y. Legis. Ann. at 336.. In response, the 1 Pierce v. Underwood, 487 U.S. 552, 565 (1988), defined the phrase “substantially justified” as “justified to a degree that could satisfy a reasonable person.” The Pierce Court explained that to “be ‘substantially justified’ means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve.” Id. at 566. 25 Legislature removed the federal authorization for both plaintiffs and defendants to obtain fees and limited awards to only plaintiffs. C.P.L.R. § 8602(f). Furthermore, the Legislature rather significantly limited the class of plaintiffs eligible to be awarded fees to individuals with a net worth of less than $50,000 (excluding the value of their home), non-profit organizations and business owners with fewer than 100 employees. C.P.L.R. § 8602(d). Second, Governor Cuomo was concerned that good-faith agency action not be deterred. Governor's Approval Mem, L 1989, ch 770 1989 N.Y. Legis. Ann. at 336. The Legislature responded to this concern by assuring the Governor of the Legislative intent to follow the federal case law, including the Supreme Court’s interpretation of “substantially justified” in Pierce v. Underwood. Id. Finally, Governor Cuomo was concerned that there be limits on the amount of fees that can be awarded. The Legislature responded by only permitting the award of reasonable fees and by prohibiting the collection of fees by any party that unreasonably protracted the litigation. C.P.L.R. § 8601(a). Of relevance here, the Governor also referenced Pierce v. Underwood for its rejection of multipliers and other enhancements of EAJA fee awards. Governor's Approval Mem, L 1989, ch 770, 1989 N.Y. Legis. Ann. at 336. In addition to departing from the federal EAJA to address Governor Cuomo’s concerns, the Legislature also departed from the federal EAJA in two 26 additional ways. First, the Legislature constricted the definition of “prevailing party” by requiring a greater degree of success than the federal EAJA required. C.P.L.R. § 8602(f) (for a full discussion of this issue. See Kaladjian at 352.) The federal EAJA did not define “prevailing party,” and the case law that developed around the term considered “whether the parties ‘succeed[ed] on any significant issue in the litigation which achieve[d] some of the benefit the parties sought in bringing suit.’” Id. (quoting Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). The New York Legislature defined “prevailing party” in its statute as one “who prevails in whole or in substantial part where such party and the state prevail upon separate issues.” C.P.L.R. § 8602(f). This was a more demanding standard than the standard then accepted by federal case law. Second, the Legislature significantly expanded the definition of “final judgment.” The “final judgment” which triggers the application of fees under the statute 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). However, the New York Legislature expanded the definition to “a judgment that is final and not appealable, and settlement.” C.P.L.R. § 8602(c). The differences between the New York EAJA and the federal EAJA were the product of careful negotiation between the Legislature and the Governor, and the final version of the bill was enacted and signed into law because it achieved the 27 statute’s intended purpose while at the same time addressing then-Governor Cuomo’s fiscal concerns. Governor Cuomo, who had previously vetoed similar bills that did not adequately address his concerns, declared, “I am pleased to sign this bill. I believe that a program of providing recompense for the cost of correcting official error is highly desirable as long as it is limited to helping those who need assistance, it does not deter State agencies from pursuing legitimate goals and it contains adequate restraints on the amount of fees awarded.” Governor's Approval Mem, L 1989, ch 770, 1989 N.Y. Legis. Ann. at 336. Thus, the New York EAJA did indeed involve a careful calibration of various concerns, but exclusion of the catalyst theory was not one of those calibrations. The Governor did not express concern about the catalyst theory, and it was not one of the named departures from the federal EAJA. As the Appellate Division pointed out, “If the Legislature had deemed it necessary to restrict the statute further by eliminating application of the theory, it would have incorporated that into the text.” (R. at 157). In other words, if it had been the Legislature’s intent to exclude the catalyst theory, the Legislature in its “careful calibration” would have departed from the federal EAJA in that respect. The Appellate Division amplified this point, stating: “it can be presumed that the Legislature considered all of the ways in which it could have made the statute more restrictive than the federal law, and incorporated into the new law only those changes that it deemed 28 necessary to satisfy the Governor's desire to place “‘adequate restraints on the amount of fees awarded.’” (R. at 157) (citations omitted). Because the catalyst theory was not one of the stated departures from the federal EAJA, the Legislature must have intended it to be part of the statute that remained “similar” to the federal EAJA. Black’s Law Dictionary defines “similar” as “[n]early corresponding” or “resembling in many respects.” Black’s Law Dictionary 1240 (5th ed. 1979). If the word “similar” in the New York EAJA is to have its generally accepted and intended meaning, it must at the very least mean that, other than specified departures or changes, the statute nearly corresponds to or resembles whatever it is being compared to: in this case, the federal EAJA and its case law as it had evolved. Therefore, to argue that the New York EAJA is dissimilar to the federal EAJA in additional ways to those specified is to deprive the word “similar” of its natural meaning. In response, the appellant argues that because the stated departures from the federal EAJA in the New York EAJA were restrictive, the Statute should be interpreted restrictively in all respects. Appellant’s Brief at 53-55. This argument is factually false. The Legislature did not simply restrict the Statute; by expanding the definition of “final judgment,” the Legislature also expanded the Statute in at least one important respect. More significantly, this argument relies on a misinterpretation of the legislative history. The better interpretation of that 29 history—that the Legislature made the changes that it felt were necessary and modeled the balance of the New York EAJA on the federal EAJA—actually argues for the inclusion of the catalyst theory. Appellant argues that the “interpretive canons” call for the New York EAJA to be narrowly construed, and therefore, the catalyst theory must be excluded because it is not mentioned in the statute. This argument is simply not helpful to this determination. The interpretive issue here involves the actual design of the statute: the New York Legislature designed a statute similar to the federal EAJA but with specified changes. Because of the particular design, everything that is similar to the federal EAJA is incorporated by reference and is not specifically mentioned. To blindly argue that the Court must “narrowly construe” the statute by excluding everything not mentioned would be to eviscerate the design of the statute because it would necessarily remove whatever is similar to the federal statute simply by virtue of the fact that it is not mentioned. The design of the statute would be undermined. This cannot have been the Legislature's intent. Canons of statutory construction are intended to help courts ascertain legislative intent, and “no statute may be construed so strictly as to result in the perversion of legislative intent.” In re Schacht, 20 A.D.2d 507, 510, 248 N.Y.S.2d 65 (3d Dept. 1964); see also McKinney’s Statutes § 92, N.Y. Stat. § 92. The effect of Appellant’s argument would be the perversion of legislative intent. 30 C. The Use of the Terms “Prevailing Party” and “Final Judgment” in the New York EAJA Contemplate the Catalyst Theory. With two specified exceptions, the New York EAJA authorizes attorneys’ fees to a prevailing party, which it defines as “a plaintiff or petitioner in the civil action against the state who prevails in whole or in substantial part where such party and the state prevail upon separate issues.” C.P.L.R. § 8602(d). There is no requirement in either the definitions or the substantive portion of the statute that a party obtains a judicial decision in order to be deemed the prevailing party, and the Appellate Division found no cause to add such a requirement. “Had the Legislature desired to define the term further so as to clarify that some ‘judicial imprimatur’ was necessary, again, it knew how to do so.” (R. 157-158). The absence of a reference to the catalyst theory in the definition of “prevailing party” does not undermine this point. As explained above, the right context for understanding the term “prevailing party” in the New York EAJA is the federal EAJA as it was interpreted in 1989, not the American Rule or the multitude of unrelated procedural provisions cited by the appellant. This is because the New York Legislature modeled its EAJA on the federal EAJA and the significant body of case law that had evolved in interpreting the federal EAJA. 2 C.P.L.R. § 8600. In 2 The appellant attempts to make something of the fact that the Appellate Division First Department consulted Merriam-Webster’s Collegiate Dictionary [11 th ed 2004] in seeking to define the term “prevail” instead of consulting Black’s Law Dictionary [5 th ed 1979], the edition in circulation at the time Article 86 was enacted, for a definition of the term “prevailing party.” Appellant’s Brief at 29. This argument overstates the support that Black’s gives to their position. 31 the context of the federal EAJA, the term “prevailing party” had by 1989 a pre- existing “accumulated legal tradition and meaning,” and pursuant to that “accumulated legal tradition and meaning,” prevailing parties were universally determined by the federal judiciary without the necessity of a judicial decision. Therefore, the State Legislature, in failing to exclude the catalyst theory in any way, clearly included it in the “cluster of ideas that were attached to the borrowed word.” Buckhannon Board and Home Care v. W.V. Dep’t of Health and Human Resources, 532 U.S. 598, 615-616 (2001) (Scalia, J., concurring). The Supreme Court noted in Bragdon v. Abbott that “When . . . judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its . . . judicial interpretations as well.” Bragdon v. Abbott , 524 U.S. 624, 644 (1998). This would seem especially true when the new statute is by its own expression modeled on the existing statute. First, the appellant simply pulls a single sentence from the body of the definition and ignores the beginning of the definition which has no reference to a “decision or verdict.” Specifically, the definition begins with the following sentence “The party to a suit who successfully prosecutes an action or successfully defends against it, prevailing on the main issue, even though not necessarily to the extent of his original contention.” Black’s Law Dictionary (5th Ed. 1979). Moreover, the Appellate Division First Department did not need to look at Black’s or any other outside source for the intended definition of “prevailing party” as this term is clearly defined within the EAJA at C.P.L.R. § 8602(f). Instead they were seeking to define the term “prevail.” “Prevail” is defined in Black’s 5 th Edition as “to be or become effective or effectual, to be in force, to obtain…[t]o succeed; to win.” This definition from Black’s is almost identical to the Merriam-Webster’s definition cited in the Appellate Division First Department’s decision. (R. 157). 32 The fact that the United States Supreme Court ruled in Buckhannon twelve years later that the catalyst theory should not have been federal law does not disprove the fact that it was settled federal law when the New York EAJA passed. As the Appellate Division pointed out, when the Buckhannon Court held that for a party to be considered a “prevailing party” the recovery must have been judicially sanctioned, the Court “upended decisions of virtually all of the federal circuit courts, which had long applied the catalyst theory in awarding attorneys’ fees.” (R. 146). 3 The New York Legislature, obviously not having the capacity to predict Buckhannon, considered the federal law as it was at the time, and that consideration included the universal application of the catalyst theory. Moreover, the New York Legislature specifically grappled with the concept of “prevailing party” in drafting the New York EAJA, and it decided to diverge from federal case law by changing the degree of success that was required. The New York Legislature determined that the federal standard as outlined in Hensley v. Eckerhart—whether the party succeeded on any significant issue in litigation which achieved some of the benefit the parties sought—was inappropriate in New 3 Other states have resisted Buckhannon’s incursion on the meaning of prevailing party in state statutes. In Graham v. DaimierChrysler Corp., the California Supreme Court reaffirmed its support of the catalyst theory and held that Buckhannon did not apply to a fee-shifting statute governing actions seeking enforcement of an important right affecting the public interest. 34 Cal.4 th 553 (2004). In DeSalvo v. Bryant, the Alaska Supreme Court upheld the catalyst theory as an appropriate basis to determine if a plaintiff was a prevailing party and therefore eligible for attorneys’ fees under Alaska R. Civ. P. 82. 42 P.2d 525 (Alaska 2002). The Supreme Court of New Jersey also recently rejected Buckhannon in a case involving fees granted under the Open Public Records Act (“OPRA”). Mason v. City of Hoboken, 196 N.J. 51, 951 A.2d 1017 (2008). 33 York and so required that a party in New York “prevail in whole or substantial part” to be awarded fees. N.Y. State Clinical Lab. Ass’n, Inc. v. Kaladjian, 85 N.Y.2d 346, 353(1995) (quoting Hensley, 461 U.S. 424, 433 (1983)). Given that the New York Legislature took the time to modulate the definition of “prevailing party” with regard to the degree of success required, the Legislature’s omission of any reference to the catalyst theory indicates that the Legislature did not intend to depart from that body of federal case law as it had evolved at that time. The New York EAJA’s departure from the federal EAJA with respect to its definition of “final judgment” further supports the argument that the New York Legislature intended to authorize use of the catalyst theory. In both the federal and state statutes, the trigger for applying for attorneys’ fees is a “final judgment.” See C.P.L.R. § 8601(b); and 28 U.S.C. § 2412(d)(2)(G). However, the New York EAJA defines “final judgment” more expansively than the federal EAJA. The federal EAJA limits a final judgment as a “judgment that is final and not appealable, and includes an order of settlement.” 28 U.S.C. § 2412(d)(2)(G). The New York EAJA expands that definition to include final and non-appealable judgments “and settlement.” C.P.L.R. § 8602(c). Given this statutory language, any requirement that makes the recovery of attorneys’ fees contingent upon judicial resolution actually conflicts with the plain text of C.P.L.R. § 8602(c), which endorses one form of non-judicial resolution—settlements—as an appropriate 34 “final judgment” for New York EAJA fee purposes. Because the statute's definition of “final judgment” encompasses a non-judicial resolution, the statute clearly envisions compensable outcomes which are not necessarily court-ordered. In New York, it is the degree of success—not the mode of resolution—that bestows prevailing party status on a party. To be entitled to attorneys’ fees, a New York EAJA fee applicant need only “identify the original goals of the lawsuit” and show “success in whole or substantial part.” See N.Y. State Clinical Lab. Ass’n v. Kaladjian, 85 N.Y.2d 346, 355 (1995). In this respect, this Court’s decision in Thomasel v. Perales, 78 N.Y.2d 561 (1991) is instructive. Two years after the passage of the New York EAJA, this Court granted attorneys’ fees under 42 U.S.C. §1988 after the petitioner and New York City’s DSS entered into an out-of-court settlement restoring the petitioner’s welfare benefits. Id. at 566. The Court noted that it was “settled 4 that a plaintiff need not obtain relief by judicial decree or formal judgment to obtain a section 1988 attorney’s fee award.” Id. at 568. Accordingly, the Court concluded, “Inasmuch as an attorney’s fee award is authorized [under §1988] when a favorable judgment is rendered on a State claim, we discern no justification for denying a fee—without any exercise of required discretion—when no formal adjudication is rendered on either State or Federal claims because a case is settled.” 4 Section 1988 was the statute that Buckhannon unsettled a decade later by requiring that a plaintiff could only obtain relief by judicial decree or formal judgment. 35 Id. While this case does not involve the New York EAJA, it does express this Court’s position that a judicial decision is not required for a party to be determined to be the prevailing party under fee-shifting statutes. In response, the appellant seeks to minimize the role of the “final judgment” definition to a mere “procedural provision describing the time and form of a fee application,” and to suggest that it would have been “unnecessarily convoluted for the Legislature to alter the settled meaning of ‘prevailing party’” in the definition. Appellant’s Brief at 50 -51. This argument, of course, relies entirely on the premise that the Legislature had the same understanding of “prevailing party” that the appellant does—an understanding that completely ignores the federal EAJA and the body of case law that evolved from it. The premise that actually stands up to scrutiny is one in which the Legislature, because it did not intend the requirement of a judicial decision, very naturally provided a procedural trigger that did not require a judicial decision. Just as importantly, Appellant’s argument renders the term “settlement” in the New York EAJA meaningless and irrelevant. However, “[i]t is an accepted rule that all parts of a statute are intended to be given effect and that a statutory construction which renders one part meaningless should be avoided.” Rocovich v. Consol. Edison Co., 78 N.Y.2d 509 at 515 (1991). 36 POINT II THE APPELLATE DIVISION CORRECTLY EFFECTUATED THE POLICY GOALS UNDERLYING THE NEW YORK EQUAL ACCESS TO JUSTICE ACT Appellants wrongly accuse the Appellate Division of substituting its own policy judgment for that of the Legislature. See Appellant’s Brief at 52. However, the court below was clearly cognizant of its duty to “give effect to the intent of the Legislature,” (R. 151), and painstakingly analyzed the text and history of the State EAJA in order to ascertain the Legislature’s intent with respect to the catalyst theory. Appellant’s fundamental error is insisting that the “the New York EAJA was enacted to achieve two equally important goals” – namely, “improving access to justice,” and placing “restraints on the amount of fees awarded.” Appellant’s Brief at 52. However, the Appellate Division correctly held that that the EAJA had only one purpose: “improving 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.” (R. 152). The restrictions on when fees may be awarded express the manner and extent to which the Legislature sought to achieve the statutory purpose, but do not constitute independent purposes in themselves. Thus the appellant is completely mistaken in accusing the Appellate Division of 37 advancing “one purpose of the Act at the expense of the other.” Appellant’s Brief at 54. The appellant seeks to elevate the statutory restrictions to equal footing with the purpose of the statute. Having done so, the appellant claims that the Appellate Division, by agreeing that the catalyst theory is incorporated into the New York EAJA, “improperly” preferred the purpose of expanding access to justice over “the purpose” of limiting the State’s fee liability. Appellant’s Brief at 53-54. In making this argument, the appellant conflates the statute’s purpose with its design. It is absolutely true that one of the goals of the statute’s design is to place “adequate restraints on the amount of fees awarded” and thus “not deter State agencies from pursing legitimate ends.” Governor's Approval Mem, L 1989, ch 770, 1989 N.Y. Legis. Ann. at 336. However, that does not elevate that particular design goal to the status of the statute’s purpose. While the drafters responded to concerns about costs, the primary purpose of New York’s fee-shifting statute is in fact to expand access to justice, and the Statute must continue to be interpreted in a way that best accomplishes that primary purpose. See, e.g., Long v. Adirondack Park Agency, 76 N.Y.2d 416, 420 (1990) (“we . . . give the statute a sensible and practical over-all construction which is consistent with and furthers its scheme and purpose and which harmonizes all its interlocking provisions.”). 38 Contrary to appellant’s contention, the Appellate Division did carefully consider the Legislature’s desire to incorporate into the EAJA “restraints on the amount of fees” desired by the Governor. (R. 152). However, the court below properly reasoned that “the Legislature considered all of the ways in which it could have made the statute more restrictive than the federal law, and incorporated into the new law only those changes that it deemed necessary to satisfy the Governor’s desire to place ‘adequate restraints on the amount of fees awarded.’” Id. (emphasis added). Thus, the Legislature limited EAJA awards to plaintiffs, and only to those plaintiffs whose assets do not exceed $50,000, and only to those plaintiffs who prevail “in substantial part.” The Legislature also denied fees in cases where the state’s action is “substantially justified.” There is no reason to assume, as the appellant advocates, that in addition to these cost-saving restrictions, the Legislature intended to impose other restrictions nowhere set forth in the text of the statute, such as the abrogation of the catalyst theory which at the time was the law in nine federal Circuits, including the Second Circuit. Ironically, the appellant sets forth in its own Brief a parade of horribles by which it implicitly invites this court to substitute its own policy judgments for that of the Legislature. Appellant’s Brief at 55–56. In so doing, the appellant oddly places heavy reliance on a 1994 Fourth Circuit decision, without giving the slightest reason why this decision of an appeals court in Virginia would reflect in 39 any way the thinking of the New York State Legislature when it enacted the EAJA four years previous, or reflect the current public policy of New York State. In any event, the evils conjured by the appellant have no basis in history or logic. Although the appellant speculates that application of the catalyst theory would place “substantial burdens” on the State, lead to the “increased filing of meritless lawsuits,” and discourage State defendants from agreeing to reasonable settlements, the appellant fails to demonstrate that any of those effects actually occurred during the twelve years when the catalyst theory was in fact the law of New York State. Indeed, had such “substantial burdens” resulted from the supposed misinterpretation of the statute, the Legislature would surely have acted sometime during those twelve years to make clear its alleged original intent to preclude the catalyst theory. Nor, with due respect to the Fourth Circuit, is there any reason to suppose that the catalyst theory would in any way encourage the filing of “marginal, even frivolous lawsuits,” because the State in such cases would be able to show that its position was “substantially justified.” Similarly, the catalyst theory does not discourage prompt settlements, because in cases where its position is not 40 substantially justified, the State is motivated to resolve matters quickly rather than risk much larger awards by defending a meritless case. 5 Essentially, the appellant is arguing that even in cases where indigent plaintiffs are compelled to file suit to correct State actions that are entirely unjustified, the State may evade its duty to pay plaintiffs’ fees by belated compliance with a rule or regulation it should never have violated in the first place, and thus frustrate the ability of the indigent to obtain counsel to challenge such unjustified actions. The Appellate Division rightly rejected the idea that Legislature intended a result so clearly at odds with its goal of “improving 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.” (R. 152). 5 The appellant also fails to support its speculative claim that application of the catalyst theory would, or ever did, require burdensome “second major litigation” in each case. Justice Hunter, in the instant case, certainly had no trouble determining that “the petition appears undoubtedly to have been the catalyst for HRA and HASA’s compliance; indeed, it appears that it was the only way left for her to get their attention after being ignored for months.” (R. 14). 41 POINT III THE LEGISLATURE’S FAILURE TO AMEND THE EQUAL ACCESS TO JUSTICE ACT IS NOT INSTRUCTIVE ABOUT THE ORIGINAL INTENT OF THE ACT Appellant places undue weight on the fact that New York’s EAJA statute has not been successfully amended post-Buckhannon. Both the New York Court of Appeals and the U.S. Supreme Court have rejected the reading of legislative failure as proof of acquiescence. United States v. Craft, 535 U.S. 274, 287 (2002) (“[F]ailed legislative proposals are ‘a particularly dangerous ground on which to rest an interpretation of a prior statute.’”) (quoting Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 650 (1990)); NLRB v. Plasterers’ Local Union No. 79, 404 U.S. 116, 129–30 (1971) (“It is at best treacherous to find in congressional silence alone the adoption of a controlling rule of law.”); N.Y. State Ass’n of Life Underwriters, Inc. v. N.Y. State Banking Dep’t, 83 N.Y.2d 353, 363 (1994) (“It is settled that inaction by the Legislature is inconclusive in determining legislative intent.”) (citations omitted). In four separate votes since 2009 the New York State Assembly has passed bills to expand the EAJA’s definition of “prevailing party” to include “a party whose pursuit of a non-frivolous claim was a catalyst for a voluntary or unilateral change in the position of the other party that provides any significant part of the relief sought.” A7395, 232d Sess. (2009); A3264, 234th Sess. (2011); A2068, 42 236th Sess. (2013). The Memorandum in support of each Assembly bill notes that the courts, not the Legislature, “have effectively repealed the EAJA.” Id. Meanwhile, the New York State Senate has never taken a position on the catalyst theory, as no bill regarding this question has ever been released to the Senate floor. S4534, 232d Sess. (2009); S5131, 234th Sess. (2011); S713, 236th Sess. (2013). Attempts to amend the New York EAJA have not been “rejected,” as the appellant asserts. Appellant’s Brief at 60. The courts have been particularly unwilling to interpret legislative silence in cases such as the case now before the court, in which the Legislature has not comprehensively revised a statute or section of the law. In such circumstances it is “‘impossible to assert with any degree of assurance that congressional failure to act represents’ affirmative congressional approval of the Court’s statutory interpretation.” Patterson v. McLean Credit Union, 491 U.S. 164, 175 n.1 (1989) (quoting Johnson v. Transportation Agency, Santa Clara Cty., 480 U.S. 616, 671–672 (1987) (Scalia, J., dissenting)). Finally, as the courts have noted, the enactment of new law is not a simple matter and the Legislature’s failure to make specific changes does not hold the power of duly passed legislation. “It does not follow . . . that Congress’ failure to overturn a statutory precedent is reason for this Court to adhere to it. It is ‘impossible to assert with any degree of assurance that congressional failure to act represents’ affirmative congressional approval of the [courts’] statutory 43 interpretation. . . . Congress may legislate, moreover, only through the passage of a bill which is approved by both Houses and signed by the President. . . . Congressional inaction cannot amend a duly enacted statute.’” Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 186 (1994) (quoting Patterson v. McLean Credit Union, 491 U.S. 164, 175 n. 1 (1989)). It could also be noted that the Legislature also failed to act to amend the Equal Access to Justice Act during the period after it became clear that New York Courts adopted the catalyst theory as applied to Article 86 as early as 1995, in Shvartszayd v Dowling, N.Y.L.J. June 26, 1995 at p. 28, col. 5 (Sup. Ct. N.Y. County) aff'd 239 A.D.2d 104 (1st Dep’t 1997), and before the catalyst theory was first repudiated by the Appellate Division First Department in Auguste in 2001. With respect to Article 86, legislative inaction is not a useful tool of statutory interpretation as the argument can cut either way; instead the intent of the Legislature who enacted Article 86 is what should control. 44 POINT IV APPELLANT OFFERS NO JUSTIFICATION FOR THEIR INACTION AND THIS PROCEEDING CLEARLY CHANGED THEIR POSITION The actions of the appellant were not substantially justified and there are no special circumstances that would make the award of fees unjust. The burden of proof is on the State to show that its position was substantially justified. See N.Y. State Clinical Lab. Ass’n v. Kaladjian, 85 N.Y.2d 346, 349 (1995). The State’s position is defined as “the act, acts or failure to act from which judicial review is sought.” C.P.L.R. § 8602(b). “Whether the position of the state was substantially justified shall be determined solely on the basis of the record before the agency or official whose act, acts, or failure to act gave rise to the civil action.” C.P.L.R. § 8601(a). However, if the lower court has made a determination that the State’s position was substantially justified, it is entitled to deference absent an abuse of discretion. Kaladjian at 468 (citing Pierce v. Underwood, 487 U.S. 552, 562 (1988)). The Supreme Court below held that the State respondent’s actions, or rather inaction, was the very opposite of substantially justified and was instead “arbitrary.” Justice Hunter held that the “petition appears undoubtedly to have been the catalyst for HRA and HASA’s compliance; indeed, it appears that it was the only way left for her to get their attention after being ignored for months.” (R. 14). The Appellate Division rightfully points out that the appellant “do not address on 45 this appeal the issue whether their actions were substantially justified” (R. 164). This is because they can offer no justification whatsoever for their inaction. The facts in the present proceeding offer a stark contrast to the facts in Wittlinger v. Wing, 99 N.Y.2d 425 (2003). In Wittlinger, the Court of Appeals held that the actions of the respondents were substantially justified, giving great deference to the findings of the Appellate Division, First Department, whose order was being reviewed. In that matter, State respondents had prodded City respondents multiple times to comply with the Decision after Fair Hearing at issue. As a result of City respondent’s failure to timely respond to that prodding there was a 47 day delay in fair hearing compliance. In Ms. Solla’s case, the appellant not only failed to “prod” the City respondents into complying with the Decision after Fair Hearing, but rather, when Ms. Solla’s attorneys made a compliance complaint on March 28, 2011, the State sent a letter which unequivocally stated that there was nothing for the appellant to do because the City had allegedly already complied with the fair hearing decision. (R. 41-42). There is no logical explanation for this response, which denied the reality of the situation. By their own admission, City respondents did not comply with the Decision after Fair Hearing until May 20, 2011. Once the present Article 78 was filed, it did not take long for State respondent’s counsel to realize the ugly truth 46 that the response to the compliance complaint was a complete falsehood and action was required to comply with the Decision after Fair Hearing. The behavior of the appellant certainly had not been substantially justified. The phrase “substantially justified” has been authoritatively interpreted by the United States Supreme Court as “justified to a degree that could satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565 (1988). “To be ‘substantially justified’ means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve.” Id. at 566. The State respondent’s actions can only be found to be substantially justified if their actions had a “reasonable basis in law and fact.” Barnett v. N.Y. State Dep’t. of Soc. Servs., 212 A.D.2d 696, 697 (2d Dep’t 1995). See also Apollon v. Giulianii, 246 A.D.2d 130, 136 (1st Dep’t 1998) (“The State's position is deemed ‘substantially justified’ if, taken as a whole, it had a reasonable basis in law and fact”). The inaction of the appellant was not substantially justified and the court below was quite correct in finding the inaction and delays of the appellant to be “arbitrary.” (R. 14). The petitioner does not argue that the State’s position was automatically unreasonable because of the delay in acquiring compliance. Whether the State’s 47 “prolonged inaction is [unreasonable] depends on the circumstances.” Wittlinger v. Wing, 99 N.Y.2d 425, 432 (2003). A reviewing court should “determine how long it should have taken the [State] to act, considering the reasons offered by the [State] for the delay.” Id. In Wittlinger, the Court of Appeals upheld the Appellate Division’s conclusion that the State’s 47-day delay in complying with an administrative fair hearing decision caused by “bureaucratic red tape” was “not so egregious” that it was unreasonable. Id. “[T]he State attempted numerous times to prod the City DSS to issue Wittlinger his benefits.” Id. “The State sent the City DSS three electronic letters notifying it of the administrative fair hearing determination and that Wittlinger had yet to receive the money.” Id. When the City finally “sent the administrative fair hearing decision to the correct public assistance center,” Wittlinger’s benefits were restored. Id. The Court of Appeals stated, “The Appellate Division concluded, in essence, that [State] delays are unavoidable given the high volume of transient recipients and the difficulty of keeping records relating to thousands of recipients whose addresses are not always permanent.” Id. Here the circumstances were very different. Here the delay in compliance was significantly longer than the delay experienced in Wittlinger—five months versus 47 days. But this is not simply a matter of difference in degree but also a difference in kind. Ms. Solla was rebuffed by the appellant immediately and 48 offered no assistance whatsoever in getting compliance with the Fair Hearing Decision. This was not a simple case of bureaucratic delay and red tape; this was an outright denial of due process by the appellant for which there was no justification. It took the filing of this Article 78 to change the State’s position and force them into action. “The determination of whether the State’s position was substantially justified is committed to the sound discretion of the court of first instance and is reviewable as an exercise of judicial discretion.” Simpkins v. Riley, 193 A.D.2d 1009, 1010–1011 (3d Dep’t 1993). The Courts below found no justification for the inaction of the State respondent. The State argues that the petitioner rushed to court instead of “contacting OTDA a second time” to seek compliance. Appellant’s Brief at 66. An examination of the State’s response to the petitioner’s March 28, 2011 Request for Compliance (R. 41) shows that this was not a realistic possibility that was invited at that time. A mere two days after the petitioner’s counsel sought compliance the State sent counsel Form Letter # XL0099 completely cutting off any possibility of a dialogue concerning compliance with the Decision after Fair Hearing (R. 42). The form letter does not provide any contact information to challenge their conclusion that they regarded “this matter as satisfactorily resolved,” nor does it invite another bite at the apple to obtain compliance. This form simply shut the 49 door in Ms. Solla’s face, forcing her to file the underlying Petition in this matter as “the only way left to get their attention.” (R. 14). 6 The appellant attempts to obfuscate when their change in conduct took place. The petitioner agrees that they issued a favorable fair hearing decision and the petitioner does not deny that the appellant “inquired with HRA” about compliance with the Decision after Fair Hearing. Appellant’s Brief at 63. These actions were only taken after—and because—Ms. Solla filed this Petition. It required Ms. Solla’s filing of this Petition to get the appellant to take action to seek compliance and to verify that compliance had actually taken place. Prior to the filing of this Article 78 the appellant failed to carry out their duties under 18 N.Y.C.R.R. § 358-6.4(c) to secure compliance by whatever means is necessary and appropriate under the circumstances of the case. It was only after the filing of this Petition that the appellant changed their position from inaction to action and it was only then that they independently confirmed compliance with the Decision after Fair Hearing. This was clearly a change in the appellant’s potion resulting from this litigation. 6 It should be noted that the letter from Louise C. Finkell references a “report from the New York City Department of Family Assistance regarding compliance with the above referenced fair hearing decision” but the appellant has never produced that report. 50 CONCLUSION For the foregoing reasons, this Court should uphold the Appellate Division’s decision and order. Dated: Brooklyn, New York April 2, 2014 Respectfully submitted, MEGHAN FAUX, ESQ. SOUTH BROOKLYN LEGAL SERVICES DANIEL BARKLEY, Of Counsel CATHERINE F. BOWMAN, Of Counsel EDWARD JOSEPHSON, Of Counsel PETER A. KEMPNER, Of Counsel 105 Court Street, 4th Floor Brooklyn, NY 11201 (718) 237-5574 Attorneys for Petitioner-Respondent By: ________________________ Peter A. Kempner, Esq. petek@sbls.org Reproduced on Recycled Paper