Appeal and cross-appeal from a judgment of the United States District Court for the Southern District of New York Griesa, J., awarding attorneys' fees under the bad faith exception of the American Rule and denying fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d) (1982). Affirmed in part, reversed in part and remanded to the district court. Meskill, J., dissents in part.
Appellants the United States Army Corps of Engineers (Corps) and the Commissioner of the New York State Department of Transportation (State) appeal from a judgment entered against them and the Federal Highway Administration (FHWA) in the United States District Court for the Southern District of New York, Griesa, J., awarding attorneys' fees to appellees. The district court awarded the fees under the bad faith exception to the American Rule. Appellees cross-appeal the denial of their request for an award of fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d) (1982) (EAJA). For the reasons that follow, we affirm in part, reverse in part and remand the case to the district court..
The instant appeal and cross-appeal involve "Westway," the once-proposed replacement for a portion of the West Side Highway in lower Manhattan. Other installments in this lengthy dispute are Sierra Club v. United States Army Corps of Engineers, 772 F.2d 1043, slip op. 1 (2d Cir. 1985); Sierra Club v. United States Army Corps of Engineers, 732 F.2d 253 (2d Cir. 1984); Sierra Club v. United States Army Corps of Engineers, 701 F.2d 1011 (2d Cir. 1983); and Sierra Club v. Hennessy, 695 F.2d 643 (2d Cir. 1982). In this appeal and cross-appeal we are called on to review the district court's ruling on appellees' attorneys' fees application. Because the facts of the case have been exhaustively reviewed in our previous opinions and in the district court's opinions, we detail here only those facts that are necessary to an understanding of our decision
The district court's decision to award fees is reported in Sierra Club v. United States Army Corps. of Engineers, 590 F. Supp. 1509 (S.D.N.Y. 1984) (Sierra Club III). The award is based on conduct that occurred at two separate trials, the results of which are reported in Action for Rational Transit v. West Side Highway Project, 536 F. Supp. 1225 (S.D.N.Y. 1982), and Sierra Club v. United States Army Corps of Engineers, 541 F. Supp. 1367 (S.D.N.Y. 1982) (Sierra Club I). Action for Rational Transit involved appellees,*fn1 the Corps and the State. The dispute concerned the Corps' issuance of a landfill permit for Westway. Appellees claimed that because the Corps relied on an Environmental Impact Statement (EIS) issued in 1977 by the State and FHWA which inadequately dealt with fisheries issues, refused to supplement that EIS when subsequent studies showed the magnitude of the EIS' error and failed to independently and adequately consider fisheries issues, its issuance of the landfill permit violated the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321 et seq. (1982), section 404 of the Clean Water Act, 33 U.S.C. § 1344 (1982), and section 10 of the Rivers and Harbors Appropriation Act of 1899, 33 U.S.C. § 403 (1982). The district court agreed that NEPA, the Clean Water Act and the Rivers and Harbors Act had been violated and issued an injunction setting aside the landfill permit.
After the first trial was concluded, the complaint was amended to add FHWA as a defendant and the parties were given the opportunity to offer additional evidence. Appellees, the State and FHWA were involved in this second trial. AT issue was FHWA's approval of Westway and its alleged violation of NEPA by relying on the inaccurate 1977 EIS and refusing to supplement that EIS when new fisheries information became available. In Sierra Club I, the district court found that the 1977 EIS was inaccurate and inadequate when issued and that "FHWA, in collaboration with the State, acted in willful derogation of the requirements of law in failing to issue a corrective supplemental environmental impact statement." 541 F. Supp. at 1383. It, therefore, nullified FHWA approval of the design, location and funding of Westway.
Appeals were taken from both district court decisions. The Corps and FHWA limited their appeals to certain aspects of the relief order. The State, however, challenged both the relief order and the merits of the court's decisions. The results of these appeals are reported in Sierra Club v. United States Army Corps of Engineers, 701 F.2d 1011 (2d Cir. 1983) (Sierra Club II).
On the merits, we affirmed the district court's conclusion that FHWA and the Corps had violated NEPA by relying on the 1977 EIS in reaching their decisions. 701 F.2D at 1029-31. We also shared the district court's view that initial responsibility for the EIS' inaccuracies on the fisheries issues must be attributed to the State. Id. at 1031. The court's finding that the Corps had violated the Clean Water Act was also affirmed. Id. at 1031-33. However, because no private cause of action exists under section 10 of the Rivers and Harbors Act, we reversed the finding that the Corps had violated that section. Id. at 1033.
With respect to the relief ordered by the district court, we upheld the court's requirement that a supplemental EIS on fisheries issues by prepared before further work on Westway could proceed. Id. at 1034-35. We also affirmed the court's requirement that FHWA, the Corps and the State keep "records of all activities, deliberations, and communications...which occur in relation to [the Westway] permit application." Id. at 1040-41. However, we vacated those parts of the court's order that required the supplemental EIS to include information on nonfisheries issues, id. at 1035-37, that prohibited FHWA and the Corps from acting as joint lead agencies, id. at 1041-42, and that appointed a special master to oversee compliance by FHWA and the Corps with the court's directives, id. at 1042-49.
Appellees' fee application was originally filed after the district court's decision in Action for Rational Transit and was supplemented after the court's decision in Sierra Club I and our decision in Sierra Club II. Appellees sought to recover their fees from FHWA, the Corps and the State under the bad faith and common benefit exceptions to the American Rule. They also sought to recover fees from FHWA and the Corps under the EAJA.
In Sierra Club III, the district court rendered its decision on the fee application. The court refused to award fees under the common benefit rule because of its belief that the rule was not applicable to the case before it. 590 F. Supp. at 1525-26. It also rejected the claim for fees under the EAJA, holding that one plaintiff's ineligibility for fees under the EAJA barred all plaintiffs from recovering fees. Id. at 1526.
The court did, however, award fees and disbursements under the bad faith exception to the American Rule. The court found that the Corps and the State acted in bad faith at the first trial. Id. at 1517-22. It also found that FHWA and the State acted in bad faith before and during the second trial. Id. at 1522-25. Finally, the court awarded fees against the State in connection with the appeal, finding that the State's appeal on the merits was "merely a further assertion of the baseless positions taken in the district court." Id. at 1525. Limiting the award to expenses incurred on fisheries related work and declining to apply a multiplier, the court awarded appellees a total of $290,254.
In awarding fees against the State, the court rejected the State's claim that it was immune from a fee award. First, relying on our decision in Gagne v. Maher, 594 F.2d 336 (3d Cir. 1979), aff'd on other grounds, 448 U.S. 122, 65 L. Ed. 2d 653, 100 S. Ct. 2570 (1980), the court rejected the State's argument that the award was barred by the Eleventh Amendment. Second, reasoning that an award of fees under the bad faith exception differs from an award of punitive damages, the court held that the award of fees under the bad faith exception differs from an award of punitive damages, the court held that the award of bad faith fees against the State was not barred by public policy as expressed in City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 69 L. Ed. 2d 616, 101 S. Ct. 2748 (1981).
The State and the Corps, but not FHWA, appeal the award of fees. The State raises four basic arguments: (1) the award of fees against it violated the Eleventh Amendment; (2) the award of fees under the bad faith exception constitutes an award of punitive damages from which it is immune; (3) the district court's finding of bad faith is unwarranted; and (4) the district court's calculation of fees is defective. The Corps limits its appeal to a claim that the record does not support the district court's ...