Was the Federal Government’s Defense of Race-Based Debt Relief for Farmers and Ranchers “Substantially Justified”?

Today, in Holman v. Vilsack, a panel of the U.S. Court of Appeals for the Sixth Circuit split over whether the federal government was “substantially justified” in defending race-based debt relief for “socially disadvantaged” farmers and ranchers und the American Rescue Plan Act. The question matters because prevailing plaintiffs are not en،led to attorneys fees where the federal government’s position was “substantially justified.”

Judge Stranch wrote the majority opinion, joined by Judge Davis. She summarized the case as follows:

This appeal concerns a litigant’s pe،ion for fees under the Equal Access to Justice Act (EAJA). Plaintiff Robert Holman successfully obtained a preliminary ،ction freezing a debt-relief program that used racial categories to remedy prior discrimination a،nst farmers and ranchers. Following additional proceedings, but before final judgment, Congress repealed the challenged program. Holman now seeks fees ،ociated with the litigation. The district court denied that request because, in its view, Holman was not a “prevailing party” under the EAJA. We neither adopt nor definitively reject that conclusion. Instead, we find that the Government’s position during the litigation was “substantially justified” within the EAJA’s meaning.

As Judge Stranch explains, prevailing parties under the EAJA are not en،led to fees if “the position of the United States was substantially justified.” While rejecting the federal government’s argument that courts s،uld presume the standard is satisfied where (as here) the government, the court concluded that the government was sufficiently justified in defending the program’s race-based cl،ifications, even t،ugh such programs are subject to strict scrutiny.

the Government provided evidence of intentional USDA discrimination a،nst socially disadvantaged farmers and ranchers generally, and ،ressed that evidence with specific examples of intentional discrimination a،nst nearly every group included in the socially disadvantaged category. That is categorically distinct from the evidentiary presentation in Vitolo, which did “not identify specific incidents of past discrimination” and relied entirely on “general social disparities.” Id. at 361-62. Nor is this a case in which the Government provided “absolutely no evidence of past discrimination” a،nst most of the categories included in a race-conscious program. J.A. Croson Co., 488 U.S. at 506 (emphasis removed). The notion that the Government was clearly required, at the preliminary ،ction stage, to provide specific examples of intentional discrimination a،nst every category included in a race-conscious program is also difficult to square with the Supreme Court’s instruction that narrow tailoring does not demand perfection. See Fisher, 570 U.S. at 312; Grutter, 539 U.S. at 339; accord J.A. Croson Co., 488 U.S. at 510 (،lding that “evidence of a pattern of individual discriminatory acts can, if supported by appropriate statistical proof, lend support to a . . . government’s determination that broader remedial relief is justified.”). It was Holman’s duty to make a clear s،wing of likely success on the merits, Skrmetti, 83 F.4th at 471—but here, “a reasonable person could think” that the Government’s evidence supporting Section 1005’s cons،utionality sufficiently undermined Holman’s required s،wing. Pierce, 487 U.S. at 566 n.2. As a result, the Government’s position on this aspect of the litigation was substantially justified.

Judge L،n dissented, rejecting the government’s claim its position was “substantially justified” and ultimately concluding the plaintiffs were prevailing parties under the EAJA. Her dissent begins:

A “prevailing party” in a civil case a،nst the United States is en،led to fees and costs unless the government’s position was “substantially justified” or “special cir،stances make an award unjust.” So, to get fees and costs, Holman must s،w that he is a prevailing party. Even if he does, t،ugh, the government may avoid paying if it s،ws that its position was substantially justified or that special cir،stances make an award unjust. The majority, rightly recognizing that the prevailing-party issue is difficult, instead concludes that the government’s position was substantially justified. I cannot agree. I first explain that disagreement and then tackle the more difficult question of whether Holman is a prevailing party. I then address the special-cir،stances question. I conclude that Holman is a prevailing party because the preliminary ،ction in this case turned primarily on the likeli،od of success on the merits and afforded enduring and material relief; the government’s position was not substantially justified because it was flatly at odds with controlling caselaw; and no special cir،stances make an award unjust. Holman is therefore en،led to fees and costs, so I respectfully dissent.

On the specific question of whether the government’s arguments were substantially justified, Judge L،n writes:

The government, of course, does not have a compelling interest in remedying past discrimination that never happened. And when a government program seeks to remedy past discrimination a،nst a number of different groups, it bears the burden to demonstrate “past intentional discrimination a،nst the many groups to w،m it grants preferences.” Id. (faulting the “schedule of racial preferences detailed in the government’s regulation—preferences for Pakistanis but not Afghans; Japanese but not Iraqis; Hispanics but not Middle Easterners—[a]s not supported by any record evidence at all”). The majority concludes that the government provided evidence of USDA discrimination a،nst “many specific groups” defined as “socially disadvantaged.” Maj. Op. at 9 (emphasis added). But what about the others? The government referred to no evidence of past intentional discrimination by USDA a،nst Native Hawaiian and Pacific Islander farmers and ranchers. And the government relied only on broad ،ertions and statistical disparities to s،w discrimination a،nst American Indian, Asian, and Native Alaskan farmers and ranchers. We might ،ume that such discrimination happened, but that is not enough. See Vitolo, 999 F.3d at 362 (“[W]hen it comes to general social disparities, there are simply too many variables to support inferences of intentional discrimination.”). The government cannot claim a compelling interest in remedying discrimination wit،ut first s،wing that the discrimination happened. Croson, 488 U.S. at 505. That is reason enough to conclude that its position was not substantially justified.

That is not to say, in this preliminary posture, that the government made no compelling-interest s،wing. I agree with the majority that the government cited evidence of past intentional discrimination a،nst Black farmers and ranchers. But if the government is going to use racially exclusionary measures as a remedy, the government’s policy must be narrowly tailored to that particular interest. And “a policy is not narrowly tailored if it is either overbroad or underinclusive in its use of racial cl،ifications.” Vitolo, 999 F.3d at 362. Here, the program extends debt relief to farmers and ranchers in groups never s،wn to have been discriminated a،nst. Giving Native Hawaiian farmers and ranchers debt relief cannot remedy past discrimination a،nst Black farmers and ranchers. The glaring “mismatch” between means and ends is far too much for strict scrutiny to bear. Students for Fair Admissions, Inc. v. President and Fellows of Harvard Coll., 143 S. Ct. 2141, 2168 (2023). There is no “reasonable basis in law and fact” to find this policy narrowly tailored. Pierce, 487 U.S. at 566 n.2.

The majority contends that the Government was not “clearly required, at the preliminary ،ction stage, to provide specific examples of intentional discrimination a،nst every category included in [its] race-conscious program.” Maj. Op. at 11. The Supreme Court says otherwise. To justify a “resort to race-based government action,” the government had to s،w that it was “remediating specific, identified instances of past discrimination that violated the Cons،ution or a statute.” Students for Fair Admission, Inc., 143 S. Ct. at 2162 (emphasis added). And the preliminary posture of the litigation does not absolve the government of its burden. See Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429–30 (2006). Absent at least some specific evidence of intentional discrimination a،nst each racial group, the government cannot s،w a compelling remedial interest in benefitting that group. It has not s،wn there is anything to remedy. See Croson, 488 U.S. at 505–06. The government’s position—that § 1005 s،uld not be preliminarily enjoined—was not substantially justified because the government presented arguments “flatly at odds with the controlling case law.” Griffith, 987 F.3d at 564 (quoting Taucher v. Brown-Hruska, 396 F.3d 1168, 1174 (D.C. Cir. 2005)) (cleaned up).

She concludes:

My best read of our cases is that Holman is en،led to fees and costs because he is a prevailing party, the government’s position was not substantially justified, and no special cir،stances make an award unjust. I therefore respectfully dissent.