SAMUEL R. PIERCE, JR., SECRETARY OF HOUSING AND URBAN DEVELOPMENT, PETITIONER V. MYRNA UNDERWOOD, ET AL. No. 86-1512 In the Supreme Court of the United States October Term, 1987 On Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit Brief for the Petitioner TABLE OF CONTENTS Opinions below Jurisdiction Statutory provisions involved Questions presented Statement Summary of argument Argument: The court of appeals misapplied EAJA 1. The government's position in the operating subsidy litigation was substantially justified within the meaning of EAJA A. The government's position is "substantially justified" if it is "reasonable," that is, if it has some substance and a fair possibility of success B. The government's position in the operating-subsidy litigation was "reasonable" II. The courts below erred in awarding fees at rates exceeding $75 per hour Conclusion OPINIONS BELOW The opinion of the court of appeals (Pet. App. 3a-13a) is reported at 761 F.2d 1342. A subsequent amendment to the opinion of the court of appeals (Pet. App. 1a-2a) is reported at 802 F.2d 1107. The opinion of the district court concerning the liability of the United States for attorneys' fees (Pet. App. 22a-36a) is reported at 547 F. Supp. 256. The opinion of the district court regarding the amount of the fee award (Pet. App. 14a-21a) is unreported. JURISDICTION The judgment of the court of appeals was entered on May 23, 1985. A timely petition for rehearing was denied on November 18, 1986 (Pet. App. 37a-38a). On February 11, 1987, Justice O'Connor extended the time for filing a petition for a writ of certiorari to and including March 18, 1987. The petition was filed on that date and was granted on May 18, 1987. The jurisdiction of this Court rests on 28 U.S.C. 1254(1). STATUTORY PROVISIONS INVOLVED The Equal Access to Justice Act, 28 U.S.C. (Supp. III) 2412(d), provides in relevant part: (1)(A) Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses * * * incurred by that party in any civil action (other than cases sounding in tort) * * * brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially jusitified or that special circumstances make an award unjust. * * * * * (2) For purposes of this subsection -- (A) "fees and other expenses" includes * * * reasonable attorney fees (The amount of fees awarded under this subsection shall be based upon prevailing market rates for the kind and quality of the services furnished, except that * * * (ii) attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.); * * * * * QUESTIONS PRESENTED 1. Whether the government was "substantially justified" within the meaning of the Equal Access to Justice Act (EAJA), 28 U.S.C. Supp. III) 2412(d), in litigating a question on which this Court, at the government's request, eventually granted certiori and issued a stay. 2. Whether the courts below properly identified the "special factors" that justify a departure from EAJA's usualy $75-per-hour fee cap. STATEMENT 1. Congress enacted the Equal Access to Justice Act (EAJA or Act), 28 U.S.C. (Supp. III) 2412(d), "to diminish the deterrent effect of seeking review of or defending against, governmental action by providing in specified situations an award of attorney fees, expert witness fees, and other costs against the United States." Pub. L. No. 96-481, Section 202(c)(1), 94 Stat. 2325. The Act does not mandate automatic fee-shifting. Instead, it provides that a court "shall award" fees to any party meeting specified qualifications (see 28 U.S.C. (Supp. III) 2412(d)(2)(B)) that prevails in a nontort civil action against the United States, "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. (Supp. III) 2412(d)(1)(A. EAJA also differs from many fee-shifting statutes in that it contains a specific statutory cap on permissible fee awards. The Act provides that fees generally are to be computed on the basis of "prevailing market rates for the kind and quality of the services furnished." 28 U.S.C. (Supp. III) 2412(d)(2)(A). But the statute conditions this general rule by directing that fees "shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." Ibid. 2. This attorneys' fee dispute arose out of respondents' challenge to a decision by the Secretary of Housing and Urban Development (HUD) not to implement an "operating subsidy" program for tenants of certain low-income housing projects. That program was one of several subsidy programs created by the Housing and Community Development Act of 1974, Pub. L. No. 93-383, Section 212, 88 Stat. 673; it was repealed by the Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, Section 322(f), 95 Stat. 403. The operating-subsidy program was designed to offset rent increases for low-income tenants attributable to project owners' rising utility expenses and property taxes; the Secretary was "authorized to make, and contract to make, additional assistance payments to the project owner" to compensate for such cost increases. 12 U.S.C. (Supp. IV 1974) 1715z-1(f)(3). The Secretary, however, determined that Congress had failed to provide her with sufficient contract authority to effectuate all of the subsidy programs authorized by the 1974 Act, and she accordingly concluded that she had discretion to decline to implement the operating subsidy program. See Dubose v. Pierce, 761 F.2d 913, 916 (2d Cir. 1985), petition for cert. pending, No. 85-516. The Secretary's decision not to implement the program gave rise to a series of lawsuits, including the Dubose litigation and the instant action, which was originally brought in the United States District Court for the District of Columbia and subsequently transferred to the Central District of California. See Underwood v. Hills, No. 76-469 (D.D.C. Apr. 5, 1979). Although the instant case was resolved adversely to the Secretary in district court (414 F. Supp. 526 (D.D.C. 1976)), this Court granted the Secretary's application for a stay of the district court's judgment pending a dedcision by the court of appeals (429 U.S. 892 (1976)). The Second Circuit in Dubose similarly granted the Secretary's motion for a stay of the district court's adverse judgment in that case (see Dubose v. Pierce, 761 F.2d at 919-920), and this Court denied a motion to vacate the Second Circuit's stay (Dubose v. Harris, 429 U.S. 1085 (1977)). This Court subsequently granted the Secretary's petitions for writs of certiori in two other operating-subsidy cases. Harris v. Ross, 431 U.S. 928 (1977); Harris v. Abrams, 431 U.S. 928 (1977). Before the Court could resolve the merits of the operating-subsidy dispute, however, the plaintiffs in the various cases and a new Secretary of HUD reached a comprehensive settlement. See generally Battles Farm Co. v. Pierce, 806 F.2d 1098, 1100 (D.C. Cir. 1986), petition for cert. pending, No. 96-1661. /1/ This Court thereupon granted the Secretary's motion to refer the two cases on which certiorari had been granted back to the respective district courts for consideration of the settlement (439 U.S. 1001 (1978)). Several years later, while the settlement was still being administered, plaintiffs' counsel in a number of the operating-subsidy cases, including this one, moved for attorneys' fees and expenses under EAJA, which had been enacted in 1980. On March 25, 1982, the district court held that the plaintiffs in this case were entitled to a fee award, determining that the government's position in the operating-subsidy dispute had not been "substantially justified" within the meaning of the Act (Pet. App. 30a-36a). The court noted that when the action here was filed, nine district courts "had already made preliminary or final rulings" adverse to HUD in operating-subsidy cases (id. at 31a). This background, in the court's view, "clearly raise(d) the possibility that the Government was unreasonable in pursuing the litigation" (id. at 32a (original quotation marks omitted)). The district court declined to attach any weight to this Court's grant of the Secretary's petitions for writs of certiorari in the two related cases, explaining that the Court might have "decided to take up the case(s) to resolve the issues against HUD once and for all" (id. at 33a). And noting that HUD eventually settled the operating-subsidy cases "essentially on the plaintiffs' terms," the district court reasoned that "(s)uch a settlement probably would not have materialized had HUD been confident that the Court would uphold its position" (ibid.). Some ten months later, the district court set the fee award (Pet. App. 14a-21a), concluding that several factors justified a departure from the usual EAJA $75-per-hour cap. While the court did not in terms find that a fee in excess of $75 per hour was necessary to attract qualified attorneys, it did state that "(f)ew attorneys possess the special skills and qualifications needed to handle successfully the litigation and settlement activities required by this case" (id. at 15a). Relying on Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975), cert. denied, 425 U.S. 951 (1976), /2/ the court then held that there also were "(o)ther special factors here" that "justif(ied) a fee award in excess of $75 per hour" (Pet. App. 15a). These included the supposed "novelty and difficulty of the issues" (id. at 16a), the "contingent nature of the fee and the undesirability of the case" (id. at 17a), the "high() calibre" of the work performed by respondents' counsel (ibid.), and "prevailing market rates" (ibid.). The court therefore found it appropriate to award fees at rates ranging from $80 and $85 per hour for work performed in 1976 to $120 per hour for work performed in 1982. Using those rates, the court calculated a lodestar of $322,700. Id. at 20a. /3/ 3. The court of appeals affirmed the award of fees (Pet. App. 3a-13a), finding for several reasons that the government's position was not "substantially justified." First, the court noted that a number of district courts had rejected the Secretary's position, "thus put(ting) (him) on clear notice that his position was without legal basis, but he continued to litigate the issue" (id. at 9a). The court also reasoned that the Secretary's decision to settle the litigation on terms that provided the plaintiffs with the requested relief "undermined" his contention that his legal position was supportable (ibid.). Conversely, the court of appeals refused to accord any weight to this Court's stay of the district court's judgment in the instant case or to its grant of certiorari in two related operating-subsidy cases, declining to "speculate as to the Court's intent in issuing those orders" (ibid.). Instead, the court found that the district court's decision on the merits in this case "establishe(d) that the Secretary had no reasonable basis in law to ignore the mandates" of the legislation establishing the operating-subsidy program (ibid.). While the court of appeals found the use of a multiplier inappropriate (see note 3, supra), it did agree with the district court that fees should be awarded here at rates exceeding $75 per hour. The court of appeals noted the trial judge's statement that few attorneys possess the requisite skill to handle cases like this one. Pet. App. 11a. And referring to the district court's use of the multi-factor analysis set forth in Kerr v. Screen Extras Guild, supra, the court of appeals held that "consideration of (the) Kerr factors is appropriate in determining the amount of fees to be awarded under the EAJA" (Pet. App. 11a). The court explained (id. at 11a-12a): The district court found that an hourly rate in excess of $75 was justified by several special factors, including the novelty and difficulty of the issues, the contingent nature of the fee, the undesirability of the case, the expertise of counsel, the amount involved and the results obtained, and the customary fees and awards in other cases. The district court did not abuse its discretion in concluding that the hourly rates requested by (respondents' counsel) -- ranging from $80 per hour for work in 1976 to $120 per hour for work in 1982 -- were appropriate and reasonable under the EAJA. The court of appeals therefore affirmed a fee award of $322,700 (id. at 13a). SUMMARY OF ARGUMENT A. 1. In making the government liable for fees under EAJA when its position is not "substantially justified," Congress sought to balance two policies: it hoped to encourage challenges to "unreasonable governmental action" (Pub. L. No. 94-481, Section 202(a), 94 Stat. 2325), while at the same time not discouraging government officials from discharging their duties under the law. It follows, both from this statutory language and from the congressional purposes, that "(t)he test of whether the Government position is substantially justified is essentially one of reasonableness in law and fact." H.R. Conf. Rep. 96-1434, 96th Cong., 2d Sess. 22 (1980). As Congress emphasized, this standard neither raises a presumption that the government should be liable for fees whenever it loses a case nor requires the government to establish that its decision to litigate was based on a substantial probability of prevailing. Instead, the government may avoid liability for fees by demonstrating that an informed judgment would have viewed its arguments as having a fair possibility of success. Rather than conduct a detailed, de novo assessment of the strength of the government's argument on the merits, we believe that, whenever possible, a court should look to objective indicia of reasonableness to determine whether the government's position was "substantially justified." These objective indicia include lower court rulings accepting the government's position, or stays embodyding a preliminary determination that the government's position had merit. Obviously, if the government was able to convince a judge that its position was sound, by definition that position must, in all but the most extraordinary cases, have had a fair hope of success. At the same time, reference to objective indicia to determine reasonableness avoids the necessity, in every case, of a second round of litigation that rehashes the merits in an attempt to grade the strength of the government's losing argument. 2. In the present case, this Court itself has provided a clear indication that the Secretary's position in the operating-subsidy litigation had merit: the full Court stayed the district judge's adverse judgment while an appeal from that judgment was pending in the court of appeals. As a number of justices have observed, the grant of such a stay presupposed that the moving party had a realistic chance of success on the merits. And if the government's position was strong enough to warrant issuance of a stay, the government certainly was substantially justified in acting on that position. Indeed, the Court's decision to issue a stay was borne out, at least in part, by its subsequent grant of certiorari in two related operating-subsidy cases. In these circumstances, there was no need for the court of appeals to have conducted its own analysis of the strength of the government's underlying position. To the extent that there is any doubt about this, an examination of the underlying merits of the operating-subsidy dispute confirms that the government's position was reasonable. The language of the statute creating the operating-subsidy program was reasonably read at the time to give the Secretary discretion in deciding whether the program should be implemented. That reading was seemingly confirmed by the existing caselaw. And because the Secretary concluded that Congress had not authorized her to commit sufficient funds to operate all of the housing subsidy programs that Congress had created, her decision not to commit the available funds to the operating-subsidy program was eminently reasonable. B. If the Court concludes that the government was "substantially justified" in the operating-subsidy litigation, respondents are entitled to no fees at all, and there is no need to reach the second question presented in this case. If the Court does have occasion to reach that question, however, it is plain that the court of appeals committed significant errors in concluding that a fee award in excess of EAJA's $75-per-hour limit was justified. In the absence of a "special factor," EAJA expressly restricts fee awards to $75 per hour; the statute lists only one such "special factor," the "limited availability of qualified attorneys for the proceedings involved." As the other courts of appeals accordingly have concluded, $75 per hour generally must be substituted for the attorney's customary rate (when that rate exceeds $75 per hour) in setting the EAJA lodestar. In this case, however, the courts below treated as "special factors" not only the supposed paucity of qualified attorneys (as to which neither court made adequate findings), but also the difficulty of the legal issues, the undesirability of the case, the expertise of counsel, the results obtained, and customary rates. If followed, this approach would render the EAJA fee cap nugatory. As this Court repeatedly has explained in litigation under other fee-shifting statutes, the factors cited by the court of appeals are presumed to be fully reflected in the lodestar, and therefore cannot justify an increase in the lodestar amount in any but the most extraordinary case. Indeed, the factors cited by the court of appeals are used in calculating fees ab initio as "special factors" justifying a departure from EAJA's $75-per-hour limit, fees in EAJA cases will be calculated in a manner identical to their computation under other statutes. That could not have been Congress's intent in placing an express statutory fee cap in EAJA. ARGUMENT THE COURT OF APPEALS MISAPPLIED EAJA The court of appeals resolved two issues in deciding this case. As a threshold matter, it concluded that the government's position in the operating-subsidy litigation was not "substantially justified." Having thus held that respondents' counsel are entitled to fees under EAJA, the court of appeals proceeded to identify several factors -- the paucity of qualified attorneys, the supposed difficulty and novelty of the legal issues, the contingent nature of the fee, the undesirability of the case, the expertise of counsel, the results obtained, and customary fees in similar lawsuits -- that, in its view, justified a departure from EAJA's $75-per-hour fee cap. Neither of these holdings is sound. The court of appeals' conclusion that the government was not justified in acting on its interpretation of the statute creating the operating-subsidy program disregarded contrary signals sent by this Court, and by other courts of appeals. And the second prong of the decision below is inconsistent both with the plain language of EAJA and with the decisions of this Court establishing general principles for calculating attorneys' fees. The reading of EAJA embraced by the court below will frustrate the statute's purposes and encourage duplicative litigation. The decision should be reversed. I. THE GOVERNMENT'S POSITION IN THE OPERATING SUBSIDY LITIGATION WAS SUBSTANTIALLY JUSTIFIED WITHIN THE MEANING OF EAJA A. The Government's Position Is "Substantially Justified" If It Is "Reasonable," That Is, If It Has Some Substance And A Fair Possibility Of Success 1. Congress enacted EAJA because it found that the prospect of having to pay high attorneys' fees was deterring individuals and small organizations "from seeking review of, and defending against, unreasonable governmental action." Pub. L. No. 94-481, Section 202(a), 94 Stat. 2325. See S. Rep. 96-253, 96th Cong., 1st Sess. 1, 5-6 (1979); H.R. Rep. 96-1418, 96th Cong., 2d Sess. 5 (1980); H.R. Rep. 99-120, 99th Cong., 1st Sess. 4, 12 (1985). At the same time, however, Congress did not want the prospect of liability for attorneys' fees to "chill public officials charged with enforcing the law from vigorously discharging their responsibilities" (H.R. Rep. 99-120, supra, at 10), a consequence that might follow from a rule prescribing mandatory fee awards against the government whenever it lost a case. See H.R. Rep. 96-1418, supra, at 114; S. Rep. 96-253, supra, at 6. To serve both of these policies, Congress made the government liable for attorneys' fees incurred by persons who successfully oppose government action -- but onlhy when the government's administrative or litigating position was not "substantially justified." That standard was chosen as a "middle ground" (H.R. Rep. 96-1418, supra, at 14) that "balances the constitutional obligation of the executive branch to see that the laws are faithfully executed against the public interest in encouraging parties to vindicate their rights" (id. at 10). See S. Rep. 96-253, supra, at 6; 125 Cong. Rec. 21435 (1979) (remarks of Sen. DeConcini). /4/ Congress made clear in EAJA's preamble that the statute was designed to encourage challenges only to "unreasonable governmental action" (Pub. L. No. 94-481, Section 202(a), 94 Stat. 2325), and the legislative history repeatedly makes the same point. /5/ It thus follows logically that "(t)he test of whether the Government position is substantially justified is essentially one of reasonableness in law and fact." H.R. Conf. Rep. 96-1434, 96th Cong., 2d Sess. 22 (1980). See S. Rep. 96-253, supra, at 6; H.R. Rep. 96-1418, supra, at 10, 13, 14; 125 Cong. Rec. 21435 (1979) (remarks of Sen. Deconcini); 126 Cong. Rec. 28104 (1980) (remarks of Sen. DeConcini). /6/ While the "reasonableness" of the government's position obviously must be assessed on a case-by-case basis (see H.R. Rep. 99-120, supra, at 10), Congress emphasized that EAJA should not be read to raise the presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing." S. Rep. 96-253, supra, at 7; H.R. Rep. 96-1418, supra, at 11. See 125 Cong. Rec. 21444-21445 (1979) (remarks of Sen. Kennedy); 131 Cong. Rec. S9993 (daily ed. July 24, 1985) (remarks of Sen. Grassley). Instead, the government must show only that an informed judgment would have viewed its arguments as having some substance and a fair possibility of success. 2. The original EAJA, which was enacted in 1981, expired by its terms on October 1, 1984. Pub. L. No. 94-481, Section 204(c), 94 Stat. 2329. Congress subsequently reenacted EAJA as of August 5, 1985. Pub. L. No. 99-80, Section 6(a), 99 Stat. 186. /7/ While the reenactment left unchanged the statutory language authorizing an award of fees in the absence of substantial justification (see Pub. L. No. 99-80, Section 2(a), 99 Stat. 184), the accompanying House report stated that the test for substantial justification "must be more than mere reasonableness." H.R. Rep. 99-120, 99th Cong., 1st Sess. 9 (1985). Despite this statement, we think it clear that the 1985 reenactment which did not alter the text of EAJA in any relevant way, should not be read to modify the "reasonableness" test for substantial justification that had been applied by 11 courts of appeals (including the court below) prior to 1985. See United States v. Yoffe, 775 F.2d 447, 449 (1st Cir. 1985) (citing cases). /8/ As we have explained, the text and history of the 1980 legislation leave no doubt that the Congress that drafted the "substantial justification" standard intended to make fees available only when the government's position was "unreasonable." Congress described the 1985 reenactment of EAJA as a "revival of certain expired provisions," and stated that EAJA's provisions should thenceforth be effective "as if they had not been repealed." Pub. L. No. 99-80, Section 6(a), 99 Stat. 186. Although Congress in 1985 expressly amended a few sections of the original Act, it gave no indication -- even in the House report (see H.R. Rep. 99-120, supra, at 4, 8) -- that it intended to change the meaning of statutory language that had been reenacted in unaltered form. Thus, as then-Judge Scalia has noted, the 1985 House report did nothing more than "comment() upon language drafted in an earlier Congress, and reenacted, unamended as far as is relevant to the present point, in the 1985 law." Hirschey v. FERC, 777 F.2d 1, 8 (D.C. Cir. 1985) (Scalia, J., concurring) (emphasis in original). Under these circumstances, the 1985 House report cannot be given dispositive weight. See generally Mohasco Corp. v. Silver, 447 U.S. 807, 822-824 (1980). Indeed, there are special reasons to be skeptical about the House report, since sponsors of the EAJA reenactment, both in the Senate and in the House, took the extraordinary step of renouncing portions of that report on the floor. See 131 Cosng. Rec. S9993 (daily ed. July 24, 1985) (remarks of Sen. Grassley); id. at 16917 (remarks of Rep. Kindness); ibid. (remarks of Rep. Moorhead). Cf. id. at 16917-16918 (remarks of Rep. Kastenmeier). See generally Rose v. FEC, 806 F.2d 1081, 1089-1090 (D.C. Cir. 1986). Despite the statement in the House report, therefore, there is little reason to believe that Congress intended to alter the settled meaning of the "substantially justified" standard through "reenactment of the same language unchanged" (Hirschey, 777 F.2d at 8 (Scalia, J., concurring) (emphasis omitted)). /9/ In any event, even if the House report is given credence, it is difficult to see any but a semantic distinction between tests that look to "reasonableness" and "more than reasonableness." On the one hand, the government plainly is liable for fees when it acts in an irrational or arbitrary way; on the other hand, the government is not liable for fees if it prevails in the lawsuit. There simply is not enough room between these poles for subtle distinctions between "reasonable," "more than reasonable," "slightly more thanreasonable," nd "clearly reasonable" (see note 9, supra) to make much of a difference in the outcome of any particular case. This is especially so given the difficulty and subjectivity of any assessment of "the initial risk of loss (that is made) when the case is over" (Pennsylvania v. Delaware Valley Citizens' Council for Clear Air, No. 85-5 (June 26, 1987) (Delaware Valley II), slip op. 10-11; cf. id. at 2 (opinion of O'Connor, J.)). No matter how the substantial justification standard is articulated, then, it must be deemed satisfied if the government's position had some substance, and if the government's arguments could have been made with a fair possibility of success. B. The Government's Position In The Operating-Subsidy Litigation Was "Reasonable" 1. In determining the reasonableness of the government's position, courts typically have undertaken a detailed, de novo assessment of the strength of the government's argument on the merits. In some cases, of course, this sort of return to first principles is made unavoidable by the nature of the EAJA standard, which eschews automatic fee-shifting. In our view, however, it is preferable, where possible, to determine liability for fees under EAJA by looking to objective indicia of reasonableness -- indicia such as lower court rulings or dissenting opinions accepting the government's position, or the grant of stays or preliminary injunctions embodying a preliminary determination that the government's position had merit. This approach to resolving claims under EAJA which generally would end the inquiry upon a showing that a neutral judge had found the government's position to have merit, accords most fully with the Act's purposes. Most obviously, if the government was able to convince a judge that its position had merit, by definition that position must, in all but the most extraordinary cases, be deemed at least presumptively "reasonable." If the government prevailed in some courts or in the preliminary stages of a case, its argument plainly must have had some substance -- and plausibly could have been made with some hope of success -- even if that argument ultimately was rejected by the weight of authority. Indeed, a contrary conclusion would put government lawyers in a quandary: in determining whether a given action exposed the government to liability for attorneys' fees, they would be unable to rely on past successes as settling the reasonableness of the government's position. Such a result inevitably would deter the government "from vigorously fulfilling its proper constitutional enforcement obligations." 125 Cong. Rec. 21435 (1979) (remarks of Sen. DeConcini). At the same time, reference to objective indicia of reasonableness avoids the necessity, in every case, of a second round of litigation that rehashes the merits in an attempt to grade the strength of the government's losing argument. This Court has repeatedly attempted to discourage labor-intensive litigation over attorneys' fees, explaining that such litigation "should be simplified to the maximum extent possible" (Delaware Valley II, slip op. 10). See Webb v. County Board of Education, 471 U.S. 234, 244 n.20 (1985); Blum v. Stenson, 465 U.S. 886, 902 N.19 (1984); Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). Yet unless prior, favorable judicial assessments of the government's case can serve as a shorthand indication that its position was reasonable, every EAJA lawsuit will provide an opportunity for litigation not only about the usual incidents of an attorney's fee dispute (such as the proper hourly rate), but also about whether the government could reasonably have believed at the outset that it might have won a case that it in fact lost. This surely must be "one of the least socially productive types of litigation imaginable." Hensley, 461 U.S. at 442 (Brennan, J., concurring in part and dissenting in part). Duplicative litigation over attorneys' fees is more than simply wasteful; it also threatens to defeat EAJA's purposes. The prospect of lengthy and unpredictable litigation about the availability of fees may make it impossible for persons interested in contesting government action to gauge the likelihood of a fee recovery. That uncertainty, and the expense associated with resolving it, may discourage challenges to unjustified government action. See Hensley, 461 U.S. at 455-456 (Brennan, J., concurring in part and dissenting in part). 2. In the present case, this Court itself has provided a clear, objective indication that the Secretary's position in the "operating subsidy litigation had merit: the full Court stayed the district court's adverse judgment while an appeal from that judgment was pending in the court of appeals. 429 U.S. 892 (1976). As Justice Brennan has observed, the Court's grant of such a stay generally presupposes that "there is a fair prospect that a majority of the Court will conclude that the decision below was erroneous." Rostker v. Goldberg, 448 U.S. 1306, 1308 (1980) (Brennan, J., in chambers). See Bellotti v. Latino Political Action Committee, 463 U.S. 1319, 1320 (1983) (Brennan, J., in chambers); Heckler v. Lopez, 463 U.S. 1328, 1330 (1983) (Rehnquist, J., in chambers); In re Roche, 448 U.S. 1312, 1314 (1980) (Brennan, J., in chambers); R. Stern, E. Grossman & S. Shapiro, Supreme Court Practice 690 (6th ed. 1986) (stay applicant must demonstrate a "reasonable probability of prevailing on the merits"). And this approach to stay applications is not new, as respondents have contended (see Br. in Opp. 24-27). To the contrary, the Court has long indicated that a stay will be granted only when the issuing Justice believes that there is "a significant possibility of reversal of the lower court's decision." Times-Picayune Pub. Corp. v. Schulingkamp, 419 U.S. 1301, 1305 (1974) (Powell, J., in chambers). See Coleman v. Paccar, Inc., 424 U.S. 1301, 1305 (1976) (Rehnquist, J., in chambers); Republican State Central Committee v. Ripon Society, 409 U.S. 1222, 1225 (1972) (Rehnquist, J., in chambers); R. Stern & E. Gressman, Supreme Court Practice 871-872, 874-875 (5th ed. 1978). Cf. Whalen v. Roe, 423 U.S. 1313, 1316-1317 (1975) (Marshall, J., in chambers). Indeed, Members of the Court have often noted that another, closely related prerequisite to the issuance of a stay -- the requirement that the applicant demonstrate a "'reasonable probability'" that four Justices will vote to grant certiorari (Wise v. Lipscomb, 434 U.S. 1329, 1333-1334 (1977) (Powell, J., in chambers) (citation omitted)) -- involves a determination that the issue presented is "'sufficiently meritorious'" (ibid.) or "sufficiently debatable" (Edwards v. New York, 76 S. Ct. 1058, 1059 (1956) (Harlan, J., in chambers) to interest the Court. See Board of School Commissioners v. Davis, 84 S. Ct. 10, 11 (1963) (Black, J., in chambers); Appalachian Power Co. v. American Institute of CPA, 80 S. Ct. 16, 18 (1959) (Brennan, J., in chambers). At least to some extent, this "'four-vote' rule reflects the policy in favor of granting a stay only when the losing party presents substantial contentions which are likely to prevail on the merits" (Holtzman v. Schlesinger, 414 U.S. 1304, 1311 (Marshall, J., in chambers). As Justice Brennan has put it, "the consideration of prospects for reversal dovetails * * * with the prediction that four Justices will vote to hear the case" (In re Roche, 448 U.S. at 1314 n.1). See R. Stern, E. Gressman & S. Shapiro, supra, at 694-695. This Court's conclusion that the Secretary was entitled to a stay in the case, coupled with the Second Circuit's conclusion to the same effect several months later in the Dubose case, /10/ should be dispositive of respondents' request for attorneys' fees. The grant of those stays plainly involved a conclusion that there was "a significant possibility of reversal of the lower court decision" (Times-Picayune Pub. Corp., 419 U.S. at 1305 (Powell, J., in chambers)). The bulk of the legal discussion in the government's stay application to this Court was in fact devoted to a demonstration that the Secretary was likely to prevail on appeal (see Stay Application No. A-259, at 9-11 (1976 Term)). /11/ And if the government's position was strong enough to convince this Court to stay an adverse district court judgment pending appeal to the court of appeals -- a form of relief not often granted (see R. Stern, E. Gressman & S. Shapiro, supra, at 678-679) -- the government certainly was "substantially justified" in acting on that position. Indeed, it is clear that the showing that must be made to obtain a stay exceeds that which must be made to establish "substantial justification" within the meaning of EAJA. Compare R. Stern, E. Gressman & S. Shapiro, supra, at 690 (applicant must establish a "reasonable probability of prevailing" in order to secure a stay) with S. Rep. 96-253, supra, at 7 (government need not establish "a substantial probability of prevailing" in order to be "substantially justified" under EAJA); H.R. Rep. 96-1418, supra, at 11 (same). This Court's action in granting a stay thus necessarily embodied a conclusion that the government had a realistic hope of success in making its arguments. And the Court's decision to issue a stay was borne out, at least in part, by its subsequent grant of certiorari in two related operating subsidy cases. Harris v. Ross, 431 U.S. 928 (1977); Harris v. Abrams, 431 U.S. 928 (1977). In the absence of a conflict in the circuits, it is unlikely that the Court would have granted the government's petitions in those cases had the Secretary's argument been viewed as wholly without merit. /12/ These objective indicia of the "reasonableness" of the government's position were sufficient to dispose of respondents' fee request, and there was no need for the court of appeals to have conducted a de novo investigation into the strength of the government's underlying position. /13/ 3. Even if it be thought necessary to examine the underlying merits of the operating-subsidy dispute, it is clear that the government's position was reasonable as an initial matter. Examination of the merits thus serves to confirm what this Court's grant of a stay and certiorari implied -- that the government's position was "substantially justified." The housing statute at issue in this case, 12 U.S.C. (1970 ed. & Supp. IV 1974) 1715z-1, provided in relevant part for three subsidy programs: a "deep subsidy" program, an "interest reduction" program, and the operating-subsidy program. The statutory provision creating the first of these programs, which provided that the Secretary "shall make, and contract to make," deep-subsidy payments, was written in unmistakably mandatory terms. 12 U.S.C. (Supp. IV 1974) 1715z-1(f)(2) (emphasis added). In contrast, the statutory language creating the two other programs was permissive, declaring that the Secretary is "authorized to make, and contract to make," operating-subsidy and interest-reduction payments. 12 U.S.C. (Supp. IV 1974) 1715z-1(f)(3) (emphasis added); 12 U.S.C. (1970 ed.) 1715z-1(a) (emphasis added). See also S. Rep. 93-693, 93d Cong., 2d Sess. 32 (1974). This difference in the language used to create the three companion programs led the Secretary to conclude that she had discretion to decline to implement the operating-subsidy program if that course would advance national housing objectives. The Secretary's conclusion drew compelling support from a then-recent decision of the District of Columbia Circuit, Pennsylvania v. Lynn, 501 F.2d 848 (1974). In an opinion by Judge McGowan, the Lynn court held that the Secretary could suspend the interest-reduction program -- which had been created in 1968 with language identical to that used to establish the operating-subsidy program in 1974 -- when she concluded that its implementation would interfere with other housing goals. While the court of appeals did not find the permissive language of Section 1715z-1(a) entirely dispositive, the court noted that "there is no warrant on the face of the authorizing subsections for decrying an intent that the Secretary's authority (to operate the program) be used under all circumstances" (501 F.2d at 854). And the court concluded that the "most basic statement of congressional housing policy" -- that derived from the Housing Act of 1949, 42 U.S.C. 1441 -- empowers the Secretary "'to choose between alternative methods of achieving the national housing objectives'" (Lynn, 501 F.2d at 854, 855 (citation omitted)). Following Congress's enactment of the 1974 Housing Act Amendments, the Secretary concluded that Congress had not authorized her to commit funds sufficient to operate all three subsidy programs (see Stay Application No. A-259, Apps. F, G (1976 Term); 76-1234 Gov't Br. at 10-19). The Secretary accordingly decided to honor her mandatory commitments under the deep-subsidy program, as well as certain pre-existing commitments under the interest-reduction program, and declined to implement the operating-subsidy program (see id. at 11 & n.10). Given the language of the statute and the existing case law, this decision to use the limited available resources in the most effective manner was plainly reasonable. And it is easy to see why consideration of this background led the Court to issue its stay. In these circumstances, there is little doubt that the Secretary was "substantially justified" in asserting and acting on her position -- and that attorneys' fees accordingly are not available to respondents under EAJA. II. THE COURTS BELOW ERRED IN AWARDING FEES AT RATES EXCEEDING $75 PER HOUR If the Court concludes that the government was "substantially justified" in the operating-subsidy litigation, respondents plainly are entitled to no fees at all, and there is no need for the Court to reach the second question presented in this case. If the Court does reach that question, however, the court of appeals' disposition of it should be reversed. That court committed significant errors in its analysis of the circumstances in which a departure from EAJA's $75-per-hour limit is permissible. 1. EAJA provides that "attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. (Supp. III) 2412(d)(2)(A)(ii). Congress did not expressly identify, either in the Act itself or in the legislative history, the universe of "special factors" that might justify fee awards in excess of the statutory limit. See H.R. Rep. 96-1418, 96th Cong., 2d Sess. 15 (1980); S. Rep. 96-253, 96th Cong., 1st Sess. 16 (1979); H.R. Rep. 96-1005, 96th Cong., 2d Sess. Pt. 1, at 11 (1980); 125 Cong. Rec. 21444 (1979) (remarks of Sen. Kennedy). See generally Aston v. Secretary of HHS, 808 F.2d 9, 11 & n.1 (2d Cir. 1986). Congress certainly understood, however, that $75 per hour -- the figure chosen as the statutory standard -- is lower than the usual rate charged by many attorneys, and that awarding fees at the $75 rate "would prevent a party from engaging * * * an expensive law firm and being able entirely to cover all the expenses that might be charged." Award of Attorneys' Fees Against the Federal Government: Hearings on S. 265 Before the Subcomm. on Courts, Civil Liberties, and the Administration of Justice of the House Comm. on the Judiciary, 96th Cong., 2d Sess. 32 (1980) (statement of Rep. Kastenmeier). Although the legislative history on this issue is sparse, therefore, one point emerges quite clearly from it. While Congress understood that attorneys' fees would be calculated on the basis of prevailing market rates, it stipulated that those fees generally are "subject to a maximum rate of $75 per hour." 125 Cong. Rec. 21444 (1979) (remarks of Sen. Kennedy); see 126 Cong. Rec. 28647 (1980) (remarks of Rep. Kastenmeier). Indeed, the congressional mandate that fees exceed $75 per hour only when "special" circumstances are present indicates that only in rare cases are higher fees justified. Cf. 28 U.S.C. (Supp. III) 2412(d)(1)(A) (barring an award of attorneys' fees, even if the government's position is not "substantially justified," where "special circumstances make an award unjust"). In light of this congressional intent, the courts of appeals, with the exception of the court below, have recognized that "(t)he $75 statutory rate is a ceiling and not a floor." Chipman v. Secretary of HHS, 781 F.2d 545, 547 (6th Cir. 1986). The courts accordingly have held that, in EAJA, Congress "'expressed clearly its intention that prevailing market rates are relevant only up to $75 per hour,'" so that "'customary rates above $75 per hour cannot support a claim in excess of the statutory maximum rate.'" Ibid. (citation omitted). As a result, $75 per hour must be substituted for the attorney's customary rate (when that customary rate exceeds $75 per hour) in computing the EAJA lodestar. See ibid.; Action on Smoking and Health v. CAB (ASH), 724 F.2d 211, 219-220, 222, 223 (D.C. Cir. 1984). Cf. Vibra-Tech Engineers, Inc. v. United States, 787 F.2d 1416, 1420 (10th Cir. 1986). /14/ The statute itself lists only one "special factor" that justifies a departure from EAJA's $75-per-hour fee cap -- the "limited availability of qualified attorneys for the proceedings involved" (28 U.S.C. (Supp. III) 2412(d)(2)(A)(ii). Noting Congress's intention to restrict fee awards, the courts have generally held that this factor comes into play only in the "unusual situation where appropriately specialized legal services cannot be obtained in the market for $75 (an hour) or less." Vibra-Tech Engineers, 787 F.2d at 1420. Accord, ASH, 724 F.2d at 217. See H.R. Rep. 96-1418, supra, at 15 (fee award in excess of $75 per hour permissible when there is "a limited availability of qualified attorneys with expertise in the particular proceedings involved"). A determination that such a situation exists requires suitably detailed factual findings about the actual availability of qualified attorneys, not generalized statements about the supposed difficulty of the case. See generally Aston, 808 F.2d at 11; Chipman, 781 F.2d at 547. Cf. Delaware Valley II, slip op. 16 (plurality opinion); Pennsylvania v. Delaware Valley Citizens' Council, No. 85-5 (July 2, 1986) (Delaware Valley I), slip op. 20. Thus, a fee award in excess of $75 per hour is not appropriate where the attorney's particular expertise, while useful in conducting the suit, was not "necessarily require(d)" for the prosecution of the litigation. ASH, 724 F.2d at 218. Any other approach would permit routine departures from the statutory cap whenever the attorney could be characterized as experienced or the case could be characterized as complex. 2. The decision below cannot be squared with these principles. In choosing to exceed the $75-per-hour cap, the court below listed as "special factors" not only the supposed paucity of attorneys possessing the necessary litigation skills (Pet. App. 11a), but also "the novelty and difficulty of the issues, the contingent nature of the fee, the undesirability of the case, the expertise of counsel, the amount involved and the results obtained, and the customary fees and awards in other cases" (id. at 12a). By this analysis, the court evidently meant to label as EAJA "special factors" all of the considerations listed in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975), cert. denied, 425 U.S. 951 (1976). That previous Ninth Circuit decision, in turn, had simply adopted (526 F.2d at 69-70) the 12 factors for calculating an attorney's fee that are set out in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). See generally Delaware Valley I, slip op. 14-15 & n.7. This reasoning cannot be reconciled with the language and plain meaning of EAJA. While baldly asserting that few attorneys possessed the skills necessary to handle this case successfully (see Pet. App. 11a, 15a), neither court below made a specific finding that "appropriately specialized legal services" could not "be obtained in the market for $75 (per hour) or less" (Vibra-Tech Engineers, 787 F.2d at 1420). On the record here, moreover, such a finding plainly could not have been made: respondents' counsel undertook the representation in this case several years before EAJA was enacted (at which time they could have had an expectation of a fee award), and they expressly disavowed any intent to obtain a fee from the settlement fund (see Pet. App. 7a, 35a). /15/ The courts below likewise erred in concluding that EAJA fees in excess of $75 per hour could be "based on the prevailing market rates * * * and on the individual attorney's expertise." Pet. App. 6a; see id. at 11a-12a, 17a. That conclusion flatly conflicts with Congress's understanding that EAJA fees would be "based on the prevailing market rate, subject to a maximum rate of $75 per hour." 125 Cong. Rec. 21444 (1979) (remarks of Sen. Kennedy) (emphasis added and original quotation marks omitted). See Chipman, 781 F.2d at 547. Indeed, the court of appeals' approach would render EAJA's $75-per-hour cap entirely nugatory. The 12 factors set out in Kerr and Johnson are considerations that have been taken into account by the courts in computing a reasonable fee under statutes that do not contain statutory caps, as an alternative to the lodestar approach. See Kerr, 526 F.2d at 70; see generally Delaware Valley I, slip op. 14. As this Court has explained, many of these factors -- including among those mentioned by the court below, the novelty and complexity of the issues, the skill and experience of counsel, the quality of representation, and the results obtained -- "are presumably fully reflected in the lodestar amount, and thus cannot serve as independent bases for increasing the basic fee award" in any but the most extraordinary case (id. at 17). See Deleware Valley II, slip op. 16 (plurality opinion); id. at 4 (O'Connor, J., concurring); Blum v. Stenson, 465 U.S. 886, 901 (1984). And if the factors cited by the court of appeals cannot justify increasing the lodestar amount, they cannot justify departing from the $75-per-hour rate on which the EAJA lodestar must be based. /16/ When computing fees under EAJA, therefore, factors such as the quality of representation, the complexity of the case, and the experience of counsel must be deemed subsumed within a lodestar calculated on the basis of the $75 rate specified by the statute. See Chipman, 781 F.2d at 547. /17/ As a result, a highly experienced (or simply high-priced) attorney may not receive his usual fee under EAJA. But that is a necessary consequence of EAJA's "explicit statutory fee cap." ASH, 724 F.2d at 217. If, instead, each of the Kerr and Johnson factors -- which are, after all, used in calculating fees ab initio under other fee-shifting statutes -- is treated as a "special factor" for EAJA purposes, attorneys compensated under EAJA will always receive more than $75 per hour, so long as they would have received more than $75 per hour had they been compensated under another statute. /18/ Indeed, if such an approach is taken, fees will be calculated under EAJA in a manner identical to their computation under fee-shifting statutes that do not have an express statutory cap. Congress plainly had no such result in mind when it explicitly limited EAJA attorneys' fees to a maximum rate of $75 per hour, and the court below had no warrant to expand that precise waiver of the government's sovereign immunity beyond its plain terms. See generally Library of Congress v. Shaw, No. 85-54 (July 1, 1986). CONCLUSION The judgment of the court of appeals would be reversed. Respectfully submitted. CHARLES FRIED Solicitor General RICHARD K. WILLARD Assistant Attorney General ALBERT G. LAUBER, JR. Deputy Solicitor General CHARLES A. ROTHFELD Assistant to the Solicitor General WILLIAM KANTER JOHN S. KOPPEL Attorneys J. MICHAEL DORSEY General Counsel GERSHON M. RATNER Associate General Counsel STEVEN M. GOLDSTEIN Attorney Department of Housing and Urban Development AUGUST 1987 /1/ Under the terms of the settlement, HUD made available a fund of approximately $60 million to reimburse tenants and project owners for their increased costs. See Dubose v. Pierce, No. 85-516 Pet. App. at 119. The agreement provided that the cost of settlement administration would be paid partially out of the settlement fund and partially by HUD (id. at 123-124). The settlement agreement further provided that "(n)one of the sums distributed may be used to pay attorney's fees" (id. at 121), and that "any money which remains after (payment of all claims and settlement costs assigned to HUD) * * * shall be returned to HUD and shall be credited to the reserve fund established by Section 236(g) of the National Housing Act, as amended" (ibid.). /2/ Kerr adopted the 12 factors for calculating an attorneys' fee that are set out in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). /3/ After setting the lodestar, the district court multiplied that figure by 3.5 to compensate respondents' attorneys for "the contingent nature of this case, its complexity, and, most importantly, the high quality of (counsel's) work, and the excellent results achieved." The court therefore entered a final fee award of $1,129,450. Pet. App. 20a. This use of a multiplier was set aside by the court of appeals. In its initial opinion, the court of appeals held that reference to a multiplier is inappropriate under EAJA, for two reasons: because EAJA, unlike other fee-shifting statutes, "places a specific dollar limit on the hourly rate to be awarded" (id. at 13a), and because "(t)here is insufficient indication that Congress intended to expose the United States to compounds of the hourly rate" (ibid.). On rehearing, the court of appeals withdrew this aspect of its opinion, finding it unnecessary to decide "whether the use of a multiplier is permissible under the statutory language of the EAJA" (id. at 2a). Instead, the court concluded that "compensation for the special factors involved in this case was adequately provided for by the allowance of the hourly rates in excess of the $75.00 specified in the statute" (ibid.). /4/ For similar reasons, Congress provided that fees should not be awarded when "special circumstances would make an award unjust"; Congress wanted to "insure that the Government is not deterred from advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts." S. Rep. 96-253, supra, at 7. See H.R. Rep. 96-1418, supra, at 11. /5/ Both the committee reports and the floor debate explain that EAJA is aimed at "unreasonable" actions by the government. See H.R. Rep. 96-1418, supra, at 5; S. Rep. 96-253, supra, at 1; 125 Cong. Rec. 21435 (1979) (remarks of Sen. DeConcini); id. at 21436 (remarks of Sen. Culver); ibid. (remarks of Sen. Stevens); id. at 21439 (remarks of Sen. Ford); id. at 21441 (remarks of Sen. Thurmond); id at 21442 (remarks of Sen. Helms); id. at 21443 (remarks of Sen. Bayh); id. at 21444 (remarks of Sen. Kennedy); 126 Cong. Rec. 27682 (1980) (remarks of Sen. Deconcini); id. at 28106 (remarks of Sen. Thurmond). See also 125 Cong. Rec. 21436 (remarks of Sen. Dole) ("careless, arbitrary, and irresponsible" government action); ibid. (remarks of Sen. Domenici) ("arbitrary and irrational" government action). /6/ The phrase "substantial justification" was borrowed from Fed. R. Civ. P. 37, which makes a party who resists discovery liable for the other party's discovery expenses, unless the resistance was "substantially justified." Fed. R. Civ. P. 37(a)(4) and (b)(2); see H.R. Rep. 96-1418, supra, at 13; 125 Cong. Rec. 21435 (19779) (remarks of Sen. DeConcini). Decisions under Rule 37 make it clear that a party lacks substantial justification only when its position is wholly without merit -- for example, when it willfully def(ies) a court order." Coca-Cola Bottling Co. v. Coca-Cola Co., 110 F.R.D. 363, 373 (D. Del. 1986). See Scott Paper Co. v. Ceilcote Co., 103 F.R.D. 591, 598 (D. Me. 1984); Brown v. U.S. Elevator Corp., 102 F.R.D. 526, 531 (D.D.C. 1984). /7/ At least eight courts of appeals have held that the 1985 legislation governs cases, like this one, that were pending on the date of EAJA's enactment (see Center for Science in the Public Interest v. Regan, 802 F.2d 518, 521-522 (D.C. Cir. 1986) (citing cases)). We do not dispute that the terms of the 1985 legislation are controlling in this case. /8/ The only court of appeals to apply a semantically different test before 1985 was the District of Columbia Circuit, which required the government to demonstrate that its position was "slightly more" than reasonable. Spencer v. NLRB, 712 F.2d 539, 558 (1983), cert. denied, 466 U.S. 936 (1984). /9/ Several courts of appeals accordingly have held that the governing standard remains one of "reasonableness," explaining that the 1985 legislative history is "conflicting and inconclusive." Russell v. National Mediation Board, 775 F.2d 1284, 1288-1289 (5th Cir. 1985). See Phil Smidt & Son, Inc. v. NLRB, 810 F.2d 638, 642 n.5 (7th Cir. 1987); Pullen v. Bowen, 820 F.2d 105 (4th Cir. 1987). Several other courts have continued to apply the "reasonableness" standard without discussion of the 1985 legislative history. See League of Women Voters v. FCC, 798 F.2d 1255, 1257 (9th Cir. 1986); Fulton v. Heckler, 784 F.2d 348, 349 (10th Cir. 1986); Yoffe, 775 F.2d at 449. Cf. Haitian Refugee Center v. Meese, 791 F.2d 1489, 1497 (11th Cir. 1986), vacated in part on other grounds, 804 F.2d 1573 (leaving it unclear whether the standard is one of "reasonableness" or "more than mere reasonableness"). And compare Herring v. United States, 781 F.2d 119, 121 (8th Cir. 1986) (reasonableness standard) with United States v. 1,378.65 Acress of Land, 794 F.2d 1313, 1318 (8th Cir. 1986) (appearing to adopt standard of "clearly" reasonable). Other courts, however, have read the 1985 legislative history -- in our view incorrectly -- as changing the applicable standard. See Gavette v. Office of Personnel Management, 785 F.2d 1568, 1579 (Fed. Cir. 1986) (en banc) (emphasis in original) (government must show "that it was clearly reasonable"); Riddle v. Secretary of HHS, 817 F.2d 1238, 1244 (6th Cir. 1987) ("the government's position must have more than a reasonable basis"), reh'g en banc granted No. 86-5228 (6th Cir. July 9, 1987); Pullen v. Bowen, 820 F.2d 105 (4th Cir. 1987). The District of Columbia Circuit has adhered to its prior view that the government's position must be "slightly more than reasonable," although it has expressed skepticism that there is any meaningful distinction between its standard and one of simple reasonableness (Battles Farm Co., 806 F.2d at 1101-1102 n.11). /10/ "In (the Second) Circuit, in addition to considering the harm to the parties and the public interest, a court must find that the movant has demonstrated 'a substantial possibility, although less than a likelihood, of success.'" Dubose v. Pierce, 761 F.2d at 920 (citations omitted). The Second Circuit in Dubose "f(ound) it unlikely that these criteria were overlooked by (it) simply because the Supreme Court had already acted," and it accordingly saw "both stays as indicative of the courts' view that the government's position was not unreasonable" (ibid.). /11/ The significance of the Underwood stay was widely recognized at the time that it was granted. See Cottonwood Park Tenants Ass'n v. HUD, No. 77-2059 (D. Kan. May 7, 1977), slip op. 11 ("In our view the Supreme Court's granting of the stay can mean little else but that there may be grave doubt as to the correctness of the holding in Underwood"); Haas v. Howard, 579 F.2d 654, 658 (1st Cir. 1978) (citation omitted) ("'the message implicit in the Supreme Court's stay of judgment in Underwood * * * is that court-ordered payment of operating subsidies should be halted until the Secretary's duty under the law is clarified'"); Taunton Gardens Co. v. Hills, 557 F.2d 877, 878 (1st Cir. 1977) ("we would be surprised if HUD's counsel were not moving to vacate the injunctions now in effect (around the country)"). Indeed, while it later reversed its position (see 579 F. Supp. 937, 950 (D. Conn. 1984), the district court in Dubose recognized at the time that "the stays issued by the Second Circuit in Dubose * * * cast doubt upon my earlier pronouncement that 'the plaintiffs will almost surely succeed in obtaining permanent injunctive relief'" (Dubose v. Pierce, 82 F.R.D. 582, 585 (D. Conn. 1979)). /12/ The court of appeals (Pet. App. 9a) refused to accord any weight to this Court's grant of a stay and of writs of certiorari, for two reasons. First, it surmised that this Court "may have granted certiorari to consider the broad question of the executive's power to impound funds, rather than the narrow issue of the meaning of 12 U.S.C. Section 1715z-1." Second, the court of appeals suggested that this Court "may have acted in sympathy with the low-income tenants who were forced to bring numerous successive actions to enforce their rights." This Court, however, plainly did not grant certiorari in the operating-subsidy cases to consider impoundment issues. The question presented in the government's petitions -- "(w)hether 12 U.S.C. (Supp. V) 1715z-1(f)(3) required the Secretary of Housing and Urban Development to establish an operating subsidy program" (No. 76-1234 Pet. 2) -- involved a simple question of statutory construction, and the entire discussion in the petitions (see id. at 7-12) was devoted to a demonstration that the Secretary's interpretation of the statute was correct. As for the court of appeals' second rationale, it is hardly likely that this Court stayed a judgment running in favor of low-income tenants and granted certiorari in two cases in which they had been successful out of "sympathy" with the tenants' position. /13/ In ruling against the government, the court below evidently found it most significant that, in its view of the merits, "the Secretary had no reasonable basis in law to ignore the mandates of section 1715z-1" (Pet. App. 9a). But the court also pointed to two "objective" criteria allegedly supportive of its conclusion: the fact that the Secretary ultimately settled the case on terms favorable to respondents (ibid.), and the fact that the Secretary had continued to litigate the operating-subsidy issue even though a number of district courts had rejected her reading of the statute (id. at 8a-9a). The government's decision to settle a case, however, sheds no light on whether its position was substantially justified. As the Second Circuit in Dubose explained, "policy reasons quite apart from the merits of the dispute may, in the last analysis, dictate a premature termination of the litigation" (761 F.2d at 920). Particularly is that so where, as here, the litigation is settled by officials of a newly-elected Administration. Cf. Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 59 (1983) (Rehnquist, J., concurring in part and dissenting in part) ("A change in administration brought about by the people casting their votes is a perfectly reasonable basis for an executive agency's reappraisal of the costs and benefits of its programs and regulations."). Indeed, "(a) holding that an agency's decision to settle an appeal on terms favorable to the claimant undercuts the agency's justification of its litigation position would discourage future settlements, a factor (courts) should not lightly disregard" (Dubose, 761 F.2d at 920). See Battles Farm Co., 806 F.2d at 1103. The district court decisions cited by the court below, of course, would be entitled to some weight if they stood alone. But those decisions cannot overcome the import of this Court's and the Second Circuit's grant of a stay. Where the judicial authority points in both directions -- where the government's position has been found to have merit by some courts but not by others -- that position must be deemed "substantially justified," because it necessarily had some plausibility and could have been advanced with a fair possibility of success. /14/ Several courts have suggested that an increase to the lodestar for exceptional representation may be permissible in extraordinary EAJA cases. But they have emphasized that "(a) court * * * is not to take into account the measure of skill normally expected of a lawyer charging $75 per hour, but rather the measure of skill expected of a lawyer commanding this lawyer's reasonable hourly fee." ASH, 724 F.2d at 219 (emphasis in original). Accord, Vibra-Tech Engineers, 787 F.2d at 1420. This approach plainly is compelled by the statute: a contrary analysis would permit anyone who retained a high-priced lawyer to obtain fees in excess of the statutory cap as a matter of course. /15/ It is obvious, moreover, that special skill was not needed to conduct the litigation here. This case was one of 17 operating-subsidy suits brought against the Secretary across the country; plaintiffs eventually were successful in all 17 (see Pet. App. 23a n.1). Thus, the district court in Dubose, while finding a fee award appropriate, declined to award a fee in excess of $75 per hour, stating that the operating-subsidy litigation "presented a relatively simple question" and that "(b)ecause an unusually high degree of legal talent was not required in this case, there was no dearth of lawyers who could have achieved similar results." Dubose v. Pierce, 579 F. Supp. 937, 953 (D. Conn. 1984), rev'd on other grounds, 761 F.2d 913 (2d Cir. 1985), petition for cert. pending, No. 85-516. Indeed, plaintiffs had prevailed against the Secretary at least preliminarily in nine operating-subsidy suits when the instant action was filed (see Pet. App. 33a n.11), and this suit was resolved in district court in less than three months, without trial and with minimal discovery, on the basis of arguments that already had been briefed elsewhere. The district court here also pointed to the settlement activities of respondents' counsel (see Pet. App. 15a) in concluding that there were few attorneys who could have handled this case. The administration of even a complex settlement, however, does not call for specialized counsel, and respondents' counsel in any event were not particularly specialized -- they spent time learning how to publicize the settlement and draft routine billing requests, time for which they were compensated. See C.A. Record Excerpts 377-548. And if there were any unusual difficulties posed by the settlement administration here, those difficulties would have been reflected in the number of hours that went into the lodestar. See Delaware Valley II, slip op. 18 (plurality opinion); id. at 4 (opinion of O'Connor, J.). /16/ The court of appeals also cited "the contingent nature of the fee" as a "special factor" warranting a departure from EAJA's fee cap (Pet. App. 11a-12a). Given the unusual nature of EAJA's "substantially justified" standards, however, we do not believe that a plaintiff's risk of losing the suit is a consideration that justifies an EAJA fee increase, whatever the relevance of that factor under other fee-shifting statutes. If such a contingency adjustment is viewed as compensating the attorney for risks peculiar to the suit (see generally Delaware Valley II, slip op. 2 (opinion of O'Connor, J.)) it is entirely out of place in EAJA litigation, where fees may be awarded only when the government's position is unreasonable; in such a case, the plaintiff's risk of loss can hardly have been high. Cf. Hirschey v. FERC, 777 F.2d 1, 4-5 (D.C. Cir. 1985). In the instant case, for example, the court of appeals concluded that the government's position was not "substantially justified" because the Secretary assertedly "had no reasonable basis in law" for failing to implement the operating-subsidy program and that the government's lack of success in various district courts put the Secretary "on clear notice that his position was without legal basis" (Pet. App. 9a). While we disagree with these characterizations of the Secretary's position, they obviously were essential to the court of appeals' holding that the government was liable for fees. And if it was clear from the outset that the Secretary's position was without merit, respondents' attorneys did not risk much in undertaking the representation here. An adjustment for contingency may also be viewed as compensating a plaintiff's attorney for the "difference in market treatment of contingent fee cases as a class" (Delaware Valley II, slip op. 1 (O'Connor, J., concurring) (emphasis in original); see id. at 12-13 (Blackmun, J., dissenting)). If so, however, the contingency adjustment must be viewed as part of the prevailing market rate for contingent-fee cases (cf. id. at 3 (Blackmun, J., dissenting)), and EAJA's cap was expressly intended to make the market rate relevant only up to $75 per hour. See 125 Cong. Rec. 21444 (1979) (remarks of Sen. Kennedy). An adjustment that is a component of every contingent fee, moreover, cannot easily be characterized as a "special factor" (28 U.S.C. (Supp. III) 2412(d)(2)(A)(ii)) justsifying a departure from the specified $75-per-hour rate. In any event, while both courts below increased the fee to compensate for contingency (Pet. App. 11a-12a, 17a), neither court supported this enhancement by making "any findings of fact concerning the degree to which contingency is compensated in the relevant market" (Delaware Valley II, slip op. (opinion of O'Connor, J.)). In this circumstance, the contingency adjustment plainly was improper. /17/ The court of appeals in ASH suggested that the EAJA lodestar could be modified to reflect contingency, quality of representation, and exceptional results -- factors that it previously had held could be used to modify the lodestar under other fee-shifting statutes. 724 F.2d at 218-219 (citing Copeland v. Marshall, 641 F.2d 880 (D.C. Cir. 1980) (en banc)). The ASH decision, however, predated this Court's holdings in Delaware Valley II, Delaware Valley I, and Blum v. Stenson, 465 U.S. 886 (1984), which indicated that those factors generally are subsumed within the lodestar. /18/ Of course, the Kerr factors may be employed in computing an EAJA fee up to the statutory cap of $75 per hour. See Florida Suncoast Villas, Inc. v. United States, 776 F.2d 974, 976 (11th Cir. 1985).