EAJA Fees in Prison Discipline: HALT/SHU Exclusion Violations Are Not “Substantially Justified,” and Threatening Misconduct Is Not a “Special Circumstance” Bar

I. Introduction

Matter of Walker v Martuscello (Appellate Division, Third Department, Apr. 30, 2026) addresses when an incarcerated person who prevails in an Article 78 challenge to a disciplinary sanction is entitled to counsel fees under New York’s Equal Access to Justice Act (EAJA), codified at CPLR 8600–8602. The petitioner, Junarian Walker, an incarcerated person with serious mental illness, challenged a Tier III disciplinary disposition that imposed a 120-day segregated confinement sanction described as Special Housing Unit (SHU) confinement, arguing that the sanction violated the Humane Alternatives to Long-Term Solitary Confinement Act (HALT Act) and the SHU Exclusion Law as applied to individuals housed in Residential Mental Health Units (RMHUs).

The key post-merits issue was fee-shifting: after Walker succeeded in annulling the SHU/segregated confinement portion of the penalty beyond three days, Supreme Court denied EAJA fees on two grounds: (1) the State’s position was “substantially justified,” and (2) “special circumstances” made a fee award unjust, emphasizing the seriousness of Walker’s threats. The Third Department reversed, holding that neither exception applied and remitting for calculation of the award.

II. Summary of the Opinion

The Third Department held that Walker was the prevailing party and that the State failed to show either statutory basis to deny fees under CPLR 8601(a). First, the State lacked a reasonable basis in law and fact to impose a 120-day segregated confinement sanction on an RMHU-housed individual without the HALT Act’s specific qualifying criteria and mandatory written findings, and the record did not rationally support treating Walker’s statements as a qualifying “imminent threat” under Correction Law § 137(6)(k)(ii)(A). Therefore, the State’s position was not “substantially justified.”

Second, Supreme Court erred in invoking “special circumstances” based on the perceived inequity of awarding fees to someone who made serious threats. The appellate court rejected an “unclean hands” style rationale where the petitioner did not exploit the government’s unlawful conduct; denying fees on that basis would undermine EAJA’s remedial purpose and risk foreclosing fee awards in prison discipline cases even where the State violates statutory protections.

The order denying fees was reversed; the motion for counsel fees was granted; and the matter was remitted to Supreme Court to determine the amount of fees owed.

III. Analysis

A. Precedents Cited

  • Matter of Wittlinger v Wing, 99 NY2d 425 (2003): The Third Department relied on this Court of Appeals decision to articulate EAJA’s purpose: enabling litigants to obtain counsel to challenge wrongful state action, especially where damages are insufficient to attract representation. This framing supported a robust fee-shifting approach when statutory rights are vindicated.
  • Matter of New York State Clinical Lab. Assn. v Kaladjian, 85 NY2d 346 (1995): This is the principal authority defining “substantially justified” as “having a reasonable basis both in law and fact.” The Walker court used this standard to test whether the State could reasonably impose the 120-day sanction under the HALT/SHU framework on the administrative record.
  • Matter of Brown v City of Schenectady, 209 AD3d 128 (3d Dept 2022): Cited for the “substantially justified” formulation and, importantly, for the appellate court’s willingness to reverse where the record does not support the lower court’s justification finding. Walker cites Brown in concluding Supreme Court abused its discretion.
  • Matter of Sutherland v Glennon, 256 AD2d 984 (3d Dept 1998): Used to emphasize that losing on the merits does not, by itself, establish that the State’s position lacked substantial justification. Walker accepts this principle, but distinguishes it by examining the statutory text and the administrative record and finding no reasonable basis.
  • Matter of Vapor Tech. Assn. v Cuomo, 203 AD3d 1516 (3d Dept 2022), lv dismissed 39 NY3d 960 (2022): Cited for the standard of review: substantial justification is committed to the trial court’s discretion but reviewable for abuse of discretion. Walker applies that review to reverse.
  • Matter of Walker v Commissioner, N.Y. State Dept. of Corr. & Community Supervision, 241 AD3d 1 (3d Dept 2025): Provides background on Walker’s serious mental illness and sets out the HALT Act/RMHU interplay. The 2026 opinion uses it to anchor the statutory scheme governing segregated confinement for RMHU-housed individuals.
  • Matter of Peterkin v New York State Dept. of Corr. & Community Supervision, 242 AD3d 26 (3d Dept 2025): Cited for the HALT Act’s written-determination requirement and the dual findings (heinous/destructive act plus significant risk of imminent serious physical injury and unreasonable security risk) needed for segregated confinement beyond the short limits.
  • Matter of Serio v New York State Dept. of Correctional Servs., 215 AD2d 835 (3d Dept 1995): Supports reversal where the State’s position is not substantially justified and reinforces that EAJA fees are appropriate when the statutory standard is not met.
  • Matter of Thomas v Coughlin, 194 AD2d 281 (3d Dept 1993): Central to the “special circumstances” analysis. Walker uses Thomas both to justify reliance on federal guidance (because CPLR 8600 modeled the state EAJA on federal law) and to reject fee denial reasoning that would nullify EAJA in the prison discipline context.
  • Albunio v City of New York, 23 NY3d 65 (2014), and Matter of Markey v Tietz, 244 AD3d 78 (3d Dept 2025): Cited to support the interpretive approach of consulting federal authorities where New York law is sparse, particularly when state statutes were modeled on federal counterparts.
  • Federal “unclean hands”/special circumstances comparators: Sakhawati v Lynch, 839 F3d 476 (6th Cir 2016); Taylor v United States, 815 F2d 249 (3d Cir 1987); Oguachuba v Immigration & Naturalization Serv., 706 F2d 93 (2d Cir 1983). Walker distinguishes these cases as involving petitioners who took advantage of government misconduct later challenged—unlike Walker, who did not exploit the illegality of the sanctioning process.

B. Legal Reasoning

1. The statutory EAJA framework and the State’s burden

CPLR 8601(a) establishes a mandatory fee-shifting rule: a court shall award fees to a prevailing party (other than the State) unless the court finds either (i) the State’s position was “substantially justified,” or (ii) special circumstances make an award unjust. The “position of the state” is the underlying act or failure to act being reviewed (CPLR 8602[e]), and substantial justification must be evaluated “solely on the basis of the record before the agency or official” (CPLR 8601[a]).

2. Why the State’s position was not “substantially justified”

The court identified the relevant state action as the imposition of a 120-day segregated confinement sanction. Under the HALT Act and the SHU Exclusion Law, RMHU-housed individuals cannot be sanctioned with segregated confinement except in “exceptional circumstances” tied to enumerated qualifying acts and written findings.

The decision focuses on Correction Law § 137(6)(k)(ii)(A), which includes “making an imminent threat of serious physical injury or death if the person has a history of causing such physical injury or death,” plus—where mental health needs are present—a reasonable determination by mental health leadership “that there is a strong likelihood” the threat will be carried out.

Even apart from the concededly missing statutorily required written findings, the Third Department found the administrative record could not reasonably support treating Walker’s crisis-call statements as a qualifying “imminent threat” under the statute, emphasizing the record deficiencies the merits court had already identified: no indication of access to the threatened individuals, and no clearly delineated history of causing serious physical injury or death. Because the plain statutory language demanded specific prerequisites, the State’s reliance on generalized concern about threats and institutional safety lacked a reasonable basis in law and fact.

The court also highlighted an “inherent conflict” in Supreme Court’s rulings: the merits determination stated the record lacked facts supporting a rational inference of the statutorily required risks, yet Supreme Court later deemed the State’s position substantially justified. That mismatch supported the abuse-of-discretion conclusion.

3. Why “special circumstances” did not apply

Supreme Court’s “special circumstances” rationale was essentially equitable: it would be unjust to award fees to a person who made “heinous threats,” and the State has a duty to protect staff and others. The Third Department rejected this approach for two related reasons.

First, it conflicts with EAJA’s purpose. If “special circumstances” could be found whenever a prisoner engaged in misconduct that led to discipline, then fee awards would be routinely foreclosed in the very category of cases where unlawful state action may be most likely to evade effective challenge absent fee shifting: prison discipline, where damages are often unavailable and the practical stakes are conditions of confinement.

Second, the court distinguished the “unclean hands” federal decisions relied on by the State. Those cases involved petitioners who “took advantage of the very government misconduct” they later challenged. Here, Walker did not exploit the unlawful process; he challenged it. The Third Department found no other special circumstances that would make an award unjust.

C. Impact

  • Stronger EAJA fee entitlement in HALT Act litigation: Where DOCCS imposes segregated confinement on RMHU-housed individuals without satisfying Correction Law § 137(6)(k)(ii) criteria and written findings, Walker signals that fee denials on “substantial justification” grounds will be difficult to sustain if the administrative record cannot rationally support the statutory prerequisites.
  • Constraining “special circumstances” in prison discipline cases: The decision narrows the State’s ability to defeat EAJA fees through equitable arguments tied to the petitioner’s misconduct. Threats and institutional-safety obligations, without more, are not “special circumstances” where the State violated statutory confinement limits.
  • Administrative-record discipline and documentation incentives: By tying substantial justification strictly to the agency record and statutory elements, Walker incentivizes DOCCS hearing officers and administrative appellate reviewers to: (i) articulate the enumerated qualifying act, (ii) document imminence and required history elements, (iii) make the “heinous or destructive” written determination using “specific objective criteria,” and (iv) address mental-health likelihood determinations where required.
  • Terminology versus reality (the SHU footnote): The opinion’s footnote reveals that “SHU” was used as a general label and that Walker may not have been moved from RMHU. Even so, the court treated the sanction as an unlawful segregated confinement penalty under the governing statutes—suggesting that labeling and formal penalty structure, not merely physical location, can trigger HALT/SHU Exclusion constraints and corresponding fee exposure.

IV. Complex Concepts Simplified

  • Article 78 proceeding: A special New York court procedure to challenge actions of state or local agencies and officials (e.g., prison disciplinary outcomes).
  • EAJA (CPLR 8601): A fee-shifting law requiring the State to pay a prevailing challenger’s reasonable attorney’s fees unless the State was substantially justified or special circumstances make a fee award unjust.
  • “Prevailing party”: A party that achieves meaningful success—here, Walker obtained annulment of the unlawful portion of the disciplinary penalty.
  • “Substantially justified”: Not “almost right,” but “reasonable in law and fact” based on the administrative record. The State can lose yet still be substantially justified, but only if its position had a sound legal and factual foundation.
  • HALT Act / SHU Exclusion Law (as applied here): Limits segregated confinement, especially for vulnerable populations like RMHU-housed individuals, and requires enumerated qualifying misconduct plus specific written findings for longer confinement.
  • “Special circumstances”: A narrow safety valve to deny fees where awarding them would be inequitable in a way consistent with EAJA’s purpose. Walker rejects using this as a broad “misconduct exception” in prison discipline litigation.
  • Tier III hearing: The most serious prison disciplinary hearing level in New York, often involving potentially lengthy confinement sanctions.

V. Conclusion

Matter of Walker v Martuscello reinforces that New York’s EAJA is intended to make challenges to unlawful state action practically litigable, including in the prison discipline setting. The Third Department held that DOCCS’s imposition of a 120-day segregated confinement sanction on an RMHU-housed individual, without the HALT Act’s required statutory predicates and written findings—and without a record supporting the “imminent threat” elements—was not “substantially justified.” It further held that the seriousness of an incarcerated person’s threats is not, by itself, a “special circumstance” that makes a fee award unjust. The case thus strengthens fee-shifting as an enforcement mechanism for HALT Act/SHU Exclusion protections and narrows equitable escape hatches that would otherwise dilute EAJA’s remedial design.