Appealed from United States Court of Claims.
Rich, Davis, Bennett, Miller, and Smith, Circuit Judges.
James A. Bailey appeals from a judgment of the United States Claims Court, 1 Cl. Ct. 69 (1983), denying his application for attorney fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412 (Supp. V 1981). It was held that: (1) the Claims Court has jurisdiction to award fees under the EAJA in this case; (2) Bailey is not entitled to attorney fees resulting from his successful prosecution of his military pay claim because the "position of the United States" was "substantially justified"; and (3) Bailey is entitled to costs under the EAJA, 28 U.S.C. § 2412(a). The government originally appealed from the holding on the Claims Court's jurisdiction, but withdrew its appeal after the subsequent decision of this court in Ellis v. United States, 711 F.2d 1571 (Fed. Cir. 1983). The only remaining issue is whether the Claims Court erred in holding that the litigating position of the United States in the United States Court of Claims was substantially justified, given the facts of this case. We vacate that part of the judgment concerning substantial justification and remand with instructions.
The underlying action for which Bailey seeks attorney fees and costs is a military pay claim in which Bailey successfully challenged the legality of his separation from the United States Air Force. According to his petition filed in the Court of Claims on May 15, 1980, Bailey was involuntarily released from active duty on June 30, 1975, as a Reserve commissioned officer after having been twice passed over for promotion to the temporary grade of major by selection boards that convened in September 1973 and October 1974. See 10 U.S.C. § 8303(d) (1976). Bailey alleged that the selection boards were not lawfully constituted in that each did not contain "an appropriate number" of Reserve officers as required by 10 U.S.C. § 266 (1976) and AFR 36-89 (1971). Bailey's petition was filed 5 months after the Court of Claims decision in Stewart v. United States, 222 Ct. Cl. 42, 611 F.2d 1356 (1979), where the court held that it was legal error for the 1975 selection board to have only one Reserve officer on a 25-member selection board. Bailey sought back pay, reinstatement to active duty, and correction of his military records.
The government filed its answer, denying Bailey's claim, on August 18, 1980. Approximately 22 months after Bailey filed his petition, the parties entered into a stipulation for entry of judgment. On March 19, 1982, the Court of Claims entered judgment for Bailey, awarding him virtually all the relief he had requested, in accordance with the stipulated settlement.
On April 16, 1982, Bailey filed an application in the Court of Claims for attorney fees and costs under the EAJA. Bailey's application is one of 34 applications filed, all involving essentially similar facts and issues of law. Bailey contended that he was a prevailing party within the meaning of the EAJA, that the position of the agency in the underlying military pay claim was not substantially justified, and that he was therefore entitled to the awards claimed. On October 1, 1982, the Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25 (1982), became effective, and Bailey's application was transferred under section 403(d) of the Act to the newly created United States Claims Court. The government opposed the application on the grounds that the Claims Court lacked jurisdiction to award fees and costs under the EAJA, the United States position was substantially justified, no fees generated prior to October 1, 1981, the effective date of the EAJA, could be awarded, and the fees claimed were excessive.
The Claims Court rejected the government's contention that it lacked jurisdiction to award attorney fees under the EAJA, but, on the merits, denied Bailey's application for attorney fees on the ground that the United States litigating position before the Court of Claims was substantially justified.*fn1 As mentioned, the government dropped its appeal of the issue of jurisdiction in light of our decision in Ellis v. United States, where it was held that the Claims Court has jurisdiction to award fees under the EAJA in applications transferred from the Court of Claims to the Claims Court by section 403(d) of the Federal Courts Improvement Act, and decided by the Claims Court on or after October 1, 1982. 711 F.2d at 1574-75. The sole remaining issue on appeal is whether the Claims Court was correct in holding that the position of the United States was substantially justified.
The EAJA provides in pertinent part that a prevailing party shall recover fees and other expenses incurred by that party in any civil action against the United States "unless the court finds that the position of the United States was substantially justified . . . ." 28 U.S.C. § 2412(d)(1)(A) (Supp. V 1981). "Fees and other expenses" include reasonable attorney fees. 28 U.S.C. § 2412(d)(2)(A). As recognized by the Claims Court, the United States has the burden of proving that its position was substantially justified. 1 Cl. Ct. at 74; see Ellis v. United States, 711 F.2d at 1575 and citations.
On appeal, Bailey urges that this court take into consideration, for purposes of substantial justification, the Air Force's failure to act administratively with reasonable promptness as to the selection board issues previously decided in Stewart, thus forcing him to hire counsel and to bring suit on these issues and labor for the settlement which was later achieved. The Claims Court rightfully refused to consider any claim for counsel's effort on the administrative level because of our decision in Broad Avenue Laundry & Tailoring v. United States, 693 F.2d 1387 (Fed. Cir. 1982), where it was held that the "position of the United States," for purposes of questions of "substantial justification," refers to the government's position in court, not its position before an administrative review board. 693 F.2d at 1390-91.
Bailey asserts that Broad Avenue was wrongly decided, particularly in light of the recent decision of the U.S. Court of Appeals for the Third Circuit in Natural Resources Defense Council v. United States Environmental Protection Agency, 703 F.2d 700 (1983), where it was held that the "position of the United States" refers to the agency action which made it necessary for the party to file suit. Id. at 707. We are of course bound by the precedents of our own circuit, and Bailey has not requested en banc consideration, a necessary prerequisite to a departure from one of our earlier holdings. South Corp. v. United States, 690 F.2d 1368, 1370-71 (Fed. Cir. 1982). Our inquiry is limited, therefore, to a determination of whether the government's position in the Court of Claims litigation was substantially justified.
On the issue of substantial justification, the Claims Court stated:
 When the "position of the United States" is viewed, as it must be, in the context of this litigation, what happened is that the government responded to plaintiff's petition, promptly undertook negotiations to settle the military pay claim set forth in that petition, offered plaintiff all of the relief he could reasonably have expected to gain by prosecution of the claim stated in the petition, and in fact afforded him, within a relatively brief and reasonable period of time, just that relief by way of an executed stipulation of settlement resulting in a court judgment.
1 Cl. Ct. at 76. The court concluded "that in all the circumstances defendant [the United States] settled this case (and those listed in Appendix A [33 plaintiffs with claims similar to Bailey's]) with commendable candor and all due diligence, that its actions in doing so were eminently reasonable, and that its 'position' was therefore 'substantially justified' so ...