Small businesses have a new chance to get the federal government to pick up their legal bills.
Under the Equal Access to Justice Act, companies that win out over Uncle Sam in a litigated controversy can ask the court to order the Treasury to pay their costs in waging or defending the suit. The government, which generally tries to narrow the reach of that statute, had maintained that it could not be used in specialized courts. Two years ago, the U.S. Court of Appeals in Atlanta agreed that the tax court has no authority to invoke the Equal Access to Justice Act. But on Feb. 25, the Court of Appeals for the federal circuit, rejecting similar Justice Department arguments, decided that the claims court does have the power to tell the government to pay a litigant's legal fees.
The Atlanta ruling does not bind appellate courts in other circuits, but the newer case establishes a national rule, because claims court cases can be reviewed only by the federal circuit tribunal. In Essex Electro v. U.S., the judges reasoned that Congress intended that the Equal Access to Justice Act be a broad statute, offering help to parties on a wide variety of suits against the government.
The ruling, which opens up all claims against the government to attorney fee award requests, comes as the Equal Access to Justic Act is being used more and more. In the 12 months ended June 30, there were 277 such petitions filed with U.S. courts -- almost twice the number filed the previous year. And either the petitioners are making their cases for reimbursement stronger, or judges are getting more receptive to the requests. In any case, judges said yes to 57 percent of the petitions; in the year ended June 30, 1983, only 40 percent of the requests for fees were granted. The size of the awards varies widely. It cost the Treasury just $5,703 in the only case in which the Commerce Department was ordered to pay; but in one Agriculture Department case, the government was told to pick up lawyer bills of $244,300, as well as paying for the expert witness who testified against the government.
Only companies with fewer than 500 employes and a net worth of less than $5 million can take advantage of the new federal circuit ruling. That's because that appellate court last year decided a company had to meet both of these small-business criteria to qualify for Equal Access to Justice Act awards. That's a tougher standard than is used in some other courts. The Court of Appeals in Philadelphia, for example, reasons that a firm is a small business as long as it meets one of the two measures.
In other cases, courts ruled that:
* Companies can communicate with the police without fear of antitrust prosecution. In general, activities that normally would be suspect under the antitrust laws -- such as competitors getting together to endorse the same marketing plans -- are immune from attack if they were done as part of a lobbying campaign. That's because the constitutional right to petition the government overrides antitrust statutes. In 1982, the U.S. Court of Apeals in San Francisco expanded that immunity to corporate dealings with the police, and now the Court of Appeals in Richmond has adopted the same interpretation. The Richmond ruling told the owners of an answering service that they have no grounds to push a monopolization case against Chesapeake & Potomac Telephone Co. based on C&P's going to the police with evidence that the service was letting customers evade toll charges. But the immunity is not absolute: "Sham" complaints intended merely to harass a competitor still can give rise to an antitrust suit.
(Ottensmeyer v. C&P Telephone, Feb. 26)
* Employers have to accept workers' plans for accommodating their religious practices to a work schedule unless those plans are unreasonable. The equal employment provisions of the 1964 Civil Rights Act require companies to try to bow to such practices as letting an employe off work on a religious holiday. But the U.S. Court of Appeals in Manhattan recently ruled, for the first time, on what a company must do if there is more than one way to make the adjustment. The employer has to go along with the worker's own proposal, the court majority ruled. In this case, it meant that a school district had to let a teacher use up on religious holidays leave days set aside for personal business, rather than have the days off count as unpaid leave.
(Philbrook v. Ansonis, March 7)
* State curbs on real estate promotional practices are unconstitutional. As more nationwide chains of real estate brokers develop, the business is being marked by zestier marketing. That trend may be accelerated by a recent Illinois Supreme Court decision that tossed out a state ban on real estate brokers' use of prizes and gifts to attract buyers unless the loot was given to all comers, regardless of whether or not they bought. The statute ran into direct conflict with the campaign adopted by Sears, Roebuck & Co. when it moved into the real estate business -- a campaign that gives those who buy houses through the Sears brokerage coupons for discounts on merchandise bought at the chain's stores. The state high court said that the law tried to ban communication of information about the discount bonus, and that the First Amendment protects such commercial speech. (Coldwell Banker v. Clayton, Feb. 22)