The U.S. Department of Labor has urged the Supreme Court to bypass a case that seeks to compel the department to cover legal fees following its loss in a trial over an Employee Stock Ownership Plan (ESOP) transaction. This request comes after a lower court confirmed that attorney fees would not be imposed on the department, labeling the decision as a “factbound determination” unworthy of Supreme Court review, the department explained in an opposition brief.
The DOL’s initial lawsuit accused Brian Bowers and Dexter Kubota of overvaluing their shares when selling their architectural firm to the company’s ESOP, which purportedly violated the transaction ethics. The trial concluded with a federal judge ruling that there was insufficient evidence to claim an unfair price for the stock. Consequently, the judge denied the defendants’ plea for attorneys’ fees but awarded around $40,000 in trial costs.
The defendants appealed, emphasizing that they should be granted attorneys’ fees under the Equal Access to Justice Act (EAJA), arguing the department’s litigation stance was unjustified. However, the Ninth Circuit Court refuted this assertion, holding that the department’s evidence was sufficiently substantial to justify its case, even though it ultimately did not prevail.
Bowers & Kubota escalated the matter to the Supreme Court, contending that there is inconsistency among federal circuit courts regarding the interpretation of “substantially justified” under the EAJA. They sought the highest court’s intervention to resolve this discrepancy, a plea backed by amicus briefs from the ESOP Association and the American Society of Appraisers.
The Labor Department argues that the case does not require Supreme Court review, noting that if the Court did take the case, it would focus solely on whether the district court abused its discretion in finding substantial justification.
The case in question is Bowers & Kubota Consulting, Inc. v. Su, U.S., No. 23-1286.