United States v. Real Property at 2659 Roundhill Drive, Alamo, California

dissenting:

1. To be liable under the Equal Access to Justice Act, the United States *1154 must take a position in litigation that is not just wrong, but so wrong that it is not “substantially justified.” 28 U.S.C. § 2412 (d)(1)(A). This means that the position must lack any “reasonable basis in both law and fact.” Pierce v. Underwood, 487 U.S. 552, 565 , 108 S.Ct. 2541 , 101 L.Ed.2d 490 (1988) (internal quotation marks omitted). An incorrect position is substantially justified under the EAJA if “a reasonable person could think it correct.” Id. at 566 n. 2, 108 S.Ct. 2541 . Pierce held that this test is similar to the test for sanctions against parties who resist discovery unreasonably: If “reasonable people could differ” about the appropriateness of the action, sanctions are unwarranted. Id. at 565 , 108 S.Ct. 2541 (internal quotation marks and citations omitted); see also Reygo Pac. Corp. v. Johnston Pump Co., 680 F.2d 647, 649 (9th Cir.1982) (holding that, under Fed. R.Civ.P. 37(a)(4), a discovery request is “substantially justified” if “reasonable people could differ as to whether the party requested must comply”).

2. Here, reasonable people can, and did, think the…

Opinion by Judge O’SCANNLAIN; Dissent by Judge KOZINZKI.

We are asked to decide whether the litigation position of the United States Department of Justice was substantially justified when it continued to advance a forfeiture claim after the Supreme Court clarified the law to the contrary.

I

The United States appeals from the district court’s judgment, pursuant to 28 U.S.C. § 2412 (d)(1)(A) of the Equal Access to Justice Act (“EAJA”), awarding Robert Fitzstephens, Wilson Young, Keith Slipper, Joseph Ippolito, Michael Thaler, and Mark Schwab (“purchasers”) attorney’s fees and costs arising from the government’s in rem forfeiture proceedings.

In 1990, Anthony and Kathryn Payton purchased real property located at 2659 Roundhill Drive, Alamo, California (“property”) for $682,500. The Paytons paid $558,310 in cash and financed the remainder through a loan from World Savings *1149 and Loan Association (“World”) secured by a mortgage and deed of trust, which was not recorded until January 24, 1993. Pursuant to 21 U.S.C. § 881 (a)(6), 1 the government instituted forfeiture proceedings on October 5,1994 in the U.S. District Court for the Northern District of California alleging that the…