En Banc 9th Circuit Takes Up Fee War in No-Fly Fumble

SAN FRANCISCO (CN) – An en banc panel of the Ninth Circuit signaled on Tuesday that it will strike down a $419,987 fee award for the pro bono lawyers who won their Malaysian client’s removal from the no-fly list, an amount her lawyers called a “pittance” limiting a person’s ability to challenge placement on government blacklists.

In a contentious hearing at the court’s headquarters in San Francisco, several judges on the 11-judge panel suggested the federal government litigated the 8-year case in bad faith because authorities knew early on the plaintiff, Rahinah Ibrahim, wasn’t a terrorist.

A finding of bad faith requires awarding Ibrahim’s lawyers at McManis Faulkner market-rate fees for the case. Without a bad-faith finding, the Equal Access to Justice Act caps attorneys’ fees at $125 per hour.

“I’m puzzled as to how you believe … that with Mendenhall v. National Transportation Safety Board, knowing that there was no problem with this woman as far as national security was concerned, that you’re not stuck basically with the idea that going forward with that in mind is not bad faith,” Circuit Judge Milan Smith Jr. told the government’s attorney.

Mendenhall, decided by the Ninth Circuit in 2000, says “when the government knows that its factual predicate is dead wrong and it proceeds as if it were right and just punishes the person to protect for whatever, that’s bad faith,” Smith added.

San Jose, California-based McManis Faulkner took on Ibrahim’s case pro bono after Transportation Security Administration agents arrested her while boarding a flight at San Francisco International Airport in 2005 to attend a conference in Hawaii.

Now an architecture dean at the University Putra Malaysia in Serdang, Ibrahim had been in California studying for a doctorate in construction engineering at Stanford University. Officials eventually let Ibrahim return to Malaysia but they revoked her student visa, which kept her from returning to Stanford to finish her thesis.

In 2014, U.S. District Judge William Alsup in San Francisco found Ibrahim had been erroneously placed on the no-fly list and other terrorism watch lists. He ordered her removal from the lists, after the Justice Department admitted the FBI agent who nominated Ibrahim to a number of watchlists incorrectly filled out the nomination form. As a result, Ibrahim was placed on the terror lists instead of the watchlists on which the agent had intended she be placed.

Despite losing Ibrahim’s First Amendment and equal protection claims, McManis Faulkner asked for more than $3.9 million in attorneys’ fees and costs. Alsup called the request “grossly overbroad” and approved an award of $419,987.36 on the recommendation of a special master.

A three-judge Ninth Circuit panel partly reversed  in 2016, finding Alsup shouldn’t have forbidden attorney’s fees for work on a number of issues for which the government had shown its position was “substantially justified” under the Equal Access to Justice Act.

The panel cited the Supreme Court’s 1990 decision in Commissioner INS v. Jean, which it said requires a judge to consider the case for fee eligibility as a whole, creating a split between the Ninth and the D.C. and Seventh circuits.

But the court upheld Alsup’s finding that the government didn’t act in bad faith and concluded that he had therefore correctly declined to award McManis Faulkner market-rate fees.

Ibrahim petitioned for en banc review, accusing the government of a slew of bad-faith moves aimed at derailing her case – including the decision to defend the case for eight years despite knowing since 2005 she wasn’t a threat.

“This litigation did not need to happen at all,” Ibrahim’s lawyer with McManis Faulkner Marwa Elzankaly told the en banc panel on Tuesday. “If there is bad faith, we’re entitled to our fee award.”

Smith grilled Justice Department attorney Joshua Waldman about why the government didn’t tell Ibrahim when she sued that her placement on the no-fly list was a mistake that had been corrected, thereby avoiding years of litigation.

Waldman said the government had a policy of neither confirming nor denying a person’s no-fly list status, which it has since dropped. He explained the government had “operational reasons” for the policy, including wanting people on the list to attempt to fly so they could be tracked.

When Chief Circuit Judge Sidney Thomas asked why the government didn’t disclose Ibrahim’s status to Alsup under seal or go to confidential mediation to avoid violating it disclosure policy, Waldman said it had tried but Alsup didn’t allow it.

“So we didn’t proceed in bad faith,” Waldman said.

It was less clear how the panel will rule on the substantial justification issue.

Elzankaly asked that the panel not send the issue back to Alsup, acknowledging her firm risked losing out on fees if Alsup makes a holistic finding that the government was substantially justified.

If the panel rules the government litigated in bad faith, McManis Faulkner will get market-rate fees without revisiting the substantial justification question.

Circuit Judge N. Randy Smith, however, said he supported remand.

“It seems to me we at least have to give them that shot,” he said.

Circuit judges Marsha Berzon, Consuelo Callahan, Morgan Christen, William Fletcher, M. Margaret McKeown, Jacqueline Nguyen, Kim McLane Wardlaw and Paul Watford also sat on the panel.


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