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The majority of the 1st U.S. Circuit Court of Appeals took the federal labor secretary to task this month for persistently trying to expel a trucking company hired to haul mail. It also awarded the business attorneys’ fees. The 1st Circuit ruled that although the government’s position was substantially justified when it initiated action six years ago over payroll irregularities, the secretary of labor’s dogged pursuit of disbarment was “ill considered” and “not substantially justified.” In its April 13 decision, Dantran, Inc. v. U.S. Department of Labor, No. 00-1656, the federal appeals court ruled that the U.S. District Court of Maine “abused its discretion” in denying attorneys’ fees and sent the case back to the District Court to determine the amount of attorneys’ fees. In a dissent, however, 1st Circuit Judge Bruce M. Selya concluded that ordering the secretary of labor to pay the trucking company’s legal fees is “unreasonable and unwise.” “In a strange twist of fate, the majority takes our earlier opinion — an opinion that I authored — and fashions it into a club, which it then wields to beat the Secretary about the ears. In doing so, the court mistakes the import of what was written,” Selya wrote. NEW ENGLAND MAIL ROUTE Dantran Inc. of Maine, a privately owned trucking company, for more than 10 years contracted with the U.S. Postal Service to haul mail in Maine, Vermont, New Hampshire and Massachusetts. The labor department sought to debar the company from government contracting for three years based on alleged violations of the McNamara-O’Hara Service Contract Act of 1965, 41 U.S.C. Sec. 351-358. A labor department investigator concluded that Dantran violated two of the act’s provisions: paying employees on a monthly basis and capping fringe benefits at 40 hours per week regardless of the number of hours the employee actually worked. Although the company promptly took action to correct the violations and paid employees $67,000 in wages owed, the secretary of labor filed the debarment complaint. The federal labor department’s Administrative Review Board reversed an administrative law judge’s finding that Dantran should not be debarred. The administrative law judge concluded that the trucking company’s violations were culpable and therefore ineligible for “unusual circumstances” relief. The District Court affirmed the board’s finding. The 1st Circuit was then asked to determine whether the lower court abused its discretion in denying Dantran’s subsequent motion for counsel fees under the Equal Access to Justice Act (EAJA), which obliges a court to award attorneys’ fees to a party that prevails in litigation against the government unless the court finds the government’s position was “substantially justified.” 28 U.S.C. Sec. 2412(d)(1)(A). In writing the opinion for the majority, Circuit Judge Frank M. Coffin noted that an ALJ earlier had found no culpability, and that the company was already “severely penalized by the government’s enforcement action.” “The insistence on forging ahead was exacerbated in this case, moreover, by the Secretary’s apparent refusal to consider appellants’ repeated offers to cut short the litigation with a settlement that would have conceded the legal issues in exchange for the relief from debarment to which they were ultimately entitled,” the majority concluded. Acknowledging that a settlement offer in and of itself doesn’t render the secretary’s position unjustified, the 1st Circuit reasoned that the decision to “persevere in light of the ALJ’s findings of unusual circumstances seems all the more unreasonable against the backdrop of appellants’ overtures.” Noting the company’s full compliance with remedial obligations, and repeated offers to settle, the court concluded, “the decision to prolong the adversarial proceedings swallowed up the earlier justifiable pursuit of debarment.”

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