Frances GUGLIETTI, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant

900 F.2d 397, 1990 WL 34642

• Court: Court of Appeals for the First Circuit
• Decided: April 23, 1990
• Docket: 89-1281
• Status: Published

Opinions

SELYA, Circuit Judge.

The Secretary of Health and Human Services (Secretary) asseverates that a fee award entered in the United States District Court for the District of Rhode Island pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), was improvident. We are persuaded that the Secretary is correct and therefore reverse.

I

Plaintiff-appellee Frances Guglietti received Social Security disability benefits from and after April 1978. The Secretary subsequently concluded that appellee was no longer disabled and, in October 1980, stopped paying her. Guglietti invoked her right of review under the Social Security Act. In succession, a departmental administrative law judge (AU), the Secretary’s Appeals Council, and the United States District Court for the District of Rhode Island (Boyle, Chief Judge), acting under 42 U.S.C. § 405(g), upheld the Secretary’s determination.¹ Plaintiff appealed to this court.

While Guglietti’s appeal was pending, Congress enacted the Social Security Disability Benefits Reform Act of 1984 (Reform Act), Pub.L. 98-460, 98 Stat. 1794 (1984). Section 2(d)(2)(C) thereof required that all cases undergoing judicial review as at September 19, 1984, in which the Secretary had terminated benefits, be returned to the Secretary for reevaluation and reconsideration in accordance with new “medical improvement” standards set forth in the Reform Act. Id., 98 Stat. at 1797. Gu-glietti’s case — unarguably a disability-termination case within the Reform Act’s purview — was remanded.

Following a reevaluation of plaintiff’s condition at the administrative level, the Secretary applied the neoteric standards, ruled that the requisite “medical improvement” was not evident, and reinstated benefits. Plaintiff thereupon returned to district court and filed a timely motion for counsel fees under EAJA. A different district judge heard and allowed the application. This appeal ensued.

II

The EAJA, with exceptions not here relevant, provides in material part that:

[A] court shall award to a prevailing party other than the United States fees and other expenses, ... incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A). To be entitled to an award of fees, a litigant must fulfill several conditions. First and foremost, she must be a “prevailing party” within the statute’s contemplation. In that connection, EAJA’s reference to prevailing party status must be read consistently with the phrase’s usage in other federal fee-shifting statutes. See McDonald v. Secretary of HHS, 884 F.2d 1468, 1474 (1st Cir.1989); Premachandra v. Mitts, 727 F.2d 717, 720 (8th Cir.1984); see also Texas State Teachers Ass’n v. Garland Independent School Dist., — U.S. -, 109 S.Ct. 1486, 1489, 103 L.Ed.2d 866 (1989); Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S.Ct. 1933, 1939 n. 7, 76 L.Ed.2d 40 (1983).

In focusing the lens of inquiry, we look to isolate some “material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute.” Texas Teachers, 109 S.Ct. at 1493. Moreover, in order to constitute a litigant as “prevailing,” the legal relationship must be altered in one of two ways: the party either must have enjoyed some bottom-line litigatory success or her suit must have had a catalytic effect in bringing about a desired result. Bearing those principles in mind, we first inspect how the prevailment question was handled below. We then explore the two paths which have traditionally led to prevailing party status, relating them to the case at bar. Finally, we discuss a line of authority suggesting that a somewhat different avenue may be open to plaintiff.

A. Proceedings Below.

In this instance, the district court ruled that plaintiff satisfied the prevailing party prong of the EAJA test. Ordinarily, we would view that determination through a deferential glass. See McDonald, 884 F.2d at 1474; see also Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 2546-49, 101 L.Ed.2d 490 (1988) (abuse of discretion standard used in reviewing district court’s determination of whether government’s position “substantially justified” for EAJA purposes). Be that as it may, a peculiar concatenation of circumstances requires that we withhold deference here.

When first filed, the EAJA application in question was referred to the magistrate. He treated the matter of plaintiff’s status summarily, stating only: “It does appear as though plaintiff prevailed since her benefits were reinstated upon reexamination of her position.” The magistrate cited no cases and offered no further explication. The Secretary objected to the magistrate’s report on several grounds, the first of which asserted that plaintiff was “not a 'prevailing party’ within the meaning of EAJA.” The Secretary’s supporting memorandum amplified that thesis at some length.

Notwithstanding, the district court took the issue as conceded.² The court was wrong: the Secretary had objected on that precise basis and developed the argumentation necessary to support the assigned error. When the trial court, in making a judgment call, obviously misapprehends the record, an appellate tribunal ought not to defer to the trial court's determination. See, e.g., Spiegel v. Trustees of Tufts College, 843 F.2d 38, 43-44 (1st Cir.1988) (“substantial deference” normally accorded to district court’s view is nullified when court fails to make specific findings) (discussing Fed.R.Civ.P. 54(b)); see also Quaker State Oil Refining Corp. v. Garrity Oil Co., 884 F.2d 1510, 1517 n. 5 (1st Cir.1989) (where magistrate’s reasoning unexplained and ensuing order “cryptic,” reviewing court need not grant full 28 U.S.C. § 636(b)(1)(A) deference, but may “discount” the magistrate’s conclusion). That principle is plainly apposite in this case.

Having exposed the error and sidetracked the occasion for deference, we could, of course, remand for further consideration below. But, neither side has urged us to follow that course; in this instance, the subsidiary “prevailment” facts are not legitimately in dispute, making the prevailing party question largely one of law; and the district judge, who had not heard the underlying disability-termination case, enjoys no special familiarity with the matter’s provenance. Under these rather uncommon circumstances, we believe the issue is better decided here and now. Cf., e.g., M.O.N.T. Boat Rental Service, Inc. v. Union Oil Co., 613 F.2d 576, 581 (5th Cir.1980) (no need to remand where good understanding of claim obtainable without further factfinding); Silva v. Romney, 473 F.2d 287, 289 n. 2 (1st Cir.1973) (no need to remand for purpose of setting forth findings where parties not misled as to basic issue); Yanish v. Barber, 232 F.2d 939, 947 (9th Cir.1956) (no need to remand where record as a whole presents no genuine issue of material fact); Urbain v. Knapp Bros. Mfg. Co., 217 F.2d 810, 816-17 (6th Cir.1954) (similar), cert. denied, 349 U.S. 930, 75 S.Ct. 772, 99 L.Ed. 1260 (1955). We write, therefore, upon a pristine page.

B. Litigatory Success.

In the more typical case, prevailing party status is conferred because a party has succeeded on a “significant issue in litigation which achieves some of the benefit ... sought in bringing suit.” Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978).³ See also Texas Teachers, 109 S.Ct. at 1491; Hensley, 461 U.S. at 433, 103 S.Ct. at 1939; Stefan v. Laurenitis, 889 F.2d 363, 369 (1st Cir.1989); Coalition for Basic Needs v. King, 691 F.2d 597, 599 (1st Cir.1982). This test, sometimes called the “merits” test, Exeter-West Greenwich Regional School Dist. v. Pontarelli, 788 F.2d 47, 50 (1st Cir.1986), “states the obvious, namely, that a party has prevailed if [she] wins the litigation.” Coalition for Basic Needs, 691 F.2d at 599. We do not think that this lane is open to Guglietti: the mere obtaining of a remand directed by Congress is not reflective of success on any issue in plaintiffs suit. The law is settled that a remand, even if won rather than donated, “lacks both the degree of finality and the causal connection to merits relief necessary to engage the gears of the EAJA.” Vascera v. Heckler, 624 F.Supp. 1198, 1202 (D.R.I.1986). Accord Cook v. Heckler, 751 F.2d 240, 241 (8th Cir.1984); Brown v. Secretary of HHS, 747 F.2d 878, 881-83 (3d Cir.1984); McGill v. Secretary of HHS, 712 F.2d 28, 31-32 (2d Cir.1983), cert. denied, 465 U.S. 1068, 104 S.Ct. 1420, 79 L.Ed.2d 745 (1984).

Moreover, the post-remand benefits which Guglietti ultimately received did not result from a by-the-numbers review of the issues raised in her complaint. Rather, reinstatement of benefits came about because of changes in the legal landscape and, perhaps, in the albedo of updated, newly received medical information about plaintiffs condition.⁴ Certainly, the mere temporal coincidence between passage of the Reform Act and the pendency of Gu-glietti’s appeal, standing alone, seems too frail a link between bottom-line success and litigation.

Plaintiff ruminates that, had she not brought her original complaint and thereafter appealed from the district court’s af-firmance of the Secretary’s decision, she would not have been in a position to take advantage of the Reform Act. That is so, see Reform Act, § 2(d)(2)(C), 98 Stat. at 1797, but it confuses a condition of recovery with a cause of recovery. As two other courts of appeals have said in rejecting identical pleas, such a ‘.‘but-for” argument distorts the EAJA framework. See Hendricks v. Bowen, 847 F.2d 1255, 1258 (7th Cir.1988); Truax v. Bowen, 842 F.2d 995, 997 (8th Cir.1988) (per curiam); see also Sherman v. Bowen, 647 F.Supp. 700, 702 (D.Me.1986) (Cyr, C.J.) (the but-for argument “proves too much”); cf. Karelitz v. Damson Oil Corp., 820 F.2d 529, 531 (1st Cir.1987) (discussing but-for causality in tort cases). In this case as in Hendricks, a case on all fours, the Secretary reinstated plaintiff’s benefits not because of plaintiff’s litigatory accomplishment but “because Congress mandated reconsideration of all such currently pending claims under a newly enacted standard.” 847 F.2d at 1258 (footnote omitted).

Inasmuch as plaintiff did not win on the merits of any litigated issue, the most heavily travelled road to prevailing party status is closed to her.

C. Catalyst Theory.

The second path to prevailing party status involves what has come to be known as the “catalyst” test. See Exeter-West Greenwich, 788 F.2d at 50. As Judge Coffin explained in a landmark case, “when plaintiffs lawsuit acts as a ‘catalyst’ in prompting defendants to take action to meet plaintiffs claims, attorney’s fees are justified [under a fee-shifting law] despite the lack of judicial involvement in the result.” Nadeau, 581 F.2d at 279. A fee-seeker’s access to the catalyst anodyne demands that she vault two hurdles en route to prevailing party status, showing (1) a causal connection between the litigation and the relief obtained, and (2) that the fee-target did not act gratuitously. Id. at 280-81. Here, the first hurdle is too high (and so, we do not reach the second).

To be regarded as a catalyst, a suit need not be the sole cause of the fee-target’s actions, but it must be a competent producing cause of those actions in at least some measurable, significant degree:

[N]o award is required if the court determines that plaintiff’s suit was completely superfluous in achieving the improvements undertaken by defendants on plaintiff’s behalf. ... [T]he plaintiff’s suit ... [must be] a necessary and important factor in achieving the improvements ....

Id.; see also Coalition for Basic Needs, 691 F.2d at 599 (same). Put another way, the litigation’s “provocative role” in the calculus of relief is a sine qua non to the fee-seeker’s successful deployment of the theorem. Nadeau, 581 F.2d at 280; Harrington v. DeVito, 656 F.2d 264, 267 (7th Cir.1981), cert. denied, 455 U.S. 993, 102 S.Ct. 1621, 71 L.Ed.2d 854 (1982).

In Truax, a case squarely in point, the Eighth Circuit found the requisite causal connection lacking:

[E]ven granting that Congress’ enactment of the Reform Act was partly a result of the thousands of suits filed by terminated claimants against the Secretary, we believe that the causal link between Truax’s individual lawsuit and Congress’s action is too tenuous to satisfy the catalyst test.

Id. at 997 (citation omitted); see also Goodro v. Bowen, 854 F.2d 313, 314-15 (8th Cir.1988); but cf. Gowen v. Bowen, 855 F.2d 613, 617 n. 3 (8th Cir.1988) (distinguishing Truax ).5 The Seventh Circuit has held the same:

The nexus between Congress’ action and [the social security claimant’s] suit is too attenuated to conclude that the latter played a “provocative role” in causing the former. The Secretary did not reinstate [claimant’s] benefits because the Secretary wanted to compromise a dispute or because he became convinced that his prior position was unprincipled. Rather, the Secretary reinstated [claimant’s] benefits because Congress mandated reconsideration of all such currently pending claims under a newly enacted standard. Admittedly, as the court noted in Truax, [such] claimants ... would not have been entitled to disability benefits if they had not pursued fully their legal remedies. But only in a hypertech-nical sense does this make [claimant’s] lawsuit the “cause” of his victory. The proximate cause of his victory was the congressional enactment of a standard under which he was entitled to relief. We simply do not believe that Congress envisioned the “prevailing party” language in the EAJA to be so broad as to encompass the instant circumstance.

Hendricks, 847 F.2d at 1258. See also id. at 1259 (Easterbrook, J., concurring) (“[C]laimant’s suit did not cause Congress to enact the Reform Act. One or a hundred or even a thousand suits, more or less, would not have affected that legislation. So [claimant] does not recover on the theory that this suit was the ‘catalyst’ for legal change.”).

It is on this ground that our dissenting brother, with a stirring analogy to soldiers storming an enemy’s hill, takes his stand. Post at p. 406. And a few other cases have marched to the same drummer. See, e.g., Robinson v. Bowen, 679 F.Supp. 1011, 1014-15 (D.Kan.1988), aff'd per curiam, 867 F.2d 600 (10th Cir.1989); Whiting v. Bowen, 671 F.Supp. 1219, 1224 (W.D.Wis.1987). With respect, however, we believe that these courts, in an earnest but result-oriented response, have stretched too far. We find authorities such as Hendricks and Truax to be more persuasive, especially because there is nothing to indicate that (1) the newly legislated standard was a more difficult one for claimants to surpass; or (2) the medical information to be examined by the Secretary after remand was restricted to that originally produced before the ALJ; or (3) the Reform Act, or its legislative history, see Hendricks, 847 F.2d at 1258-59; see also Goodro, 854 F.2d at 315 (Benson, J., concurring), foreshadowed an expectation that beneficiaries of the legislation would receive counsel fees as well. In fine, it seems naive in a run-of-the-mine case like this one to credit the change in the law to the recipient’s appeal. And in the absence of such credit, the first condition precedent to animating the catalyst theory cannot be met.

We make one additional point. The EAJA environment is simply not the place to attempt to broaden prevailing party jurisprudence. The test of prevailing party status is itself “a generous formulation.” Hensley, 461 U.S. at 433, 103 S.Ct. at 1939. EAJA, which “constitutes a waiver of sovereign immunity [such that] its words must be narrowly construed and its borders rigorously observed,” In re Perry, 882 F.2d 534, 538 (1st Cir.1989), offers especially inhospitable soil for further liberalization of that “generous formulation.” Stretching the catalyst theory to new, untested lengths is not called for in this case. Cf. id. at 544 n. 8 (noting that shifting of attorneys’ fees is much less expansively expressed under EAJA than under civil rights statutes); Sierra Club v. Secretary of the Army, 820 F.2d 513, 516-17 (1st Cir.1987) (same).

D. Another Approach.

There is yet another avenue which plaintiff urges us to explore. The alternative contemplates a case-specific method whereby the district court must review each disability-termination suit to see if, in its judgment, the claimant “was going to win anyway,” Hendricks, 847 F.2d at 1261 (Easter-brook, J., concurring); see also Sherman, 647 F.Supp. at 702-03. After due consideration, we believe plaintiff’s suggestion must be rejected in favor of a bright-line rule such as that adopted by the Seventh and Eighth Circuits.

The essential fallacy which underlies the case-specific approach is that it confuses EAJA’s two prongs. EAJA requires both that the private litigant prevail and that the government’s position lack substantial justification. See 28 U.S.C. § 2412(d)(1)(A), quoted supra at p. 398. Divining hypothetical error is in our estimation more properly to be considered on the “substantial justification” furculum of the standard. Using it to overcome the prevailing party hurdle double counts and also blurs the distinction between the two prongs in a way which frustrates Congress’ careful draftsmanship. Cf. Brown, 747 F.2d at 882 (warning, in an EAJA context, against subsuming these “two distinct issues [prevailing party/substantial justification] under one general heading”).⁶ In short, the potential strength of a claimant’s position on the substantial justification battleground cannot be allowed to obscure the threshold question of whether claimant can be said to have prevailed on the merits of her litigation.

We acknowledge that, from a purely equitable standpoint, plaintiffs suggested alternative has some obvious appeal. But, hard cases make bad law. The Court has repeatedly warned against permitting fee disputes to “spawn a second litigation of significant dimension.” Texas Teachers, 109 S.Ct. at 1493; see also Underwood, 108 S.Ct. at 2549; Hensley, 461 U.S. at 437, 103 S.Ct. at 1941. On this basis, we have given weight to “considerations of judicial economy” in the EAJA context. See McDonald, 884 F.2d at 1480. The case-specific approach requires nothing less than the hypothetical relitigation of cases which, because of the Reform Act’s passage, need not be litigated at all. It thus countervails the Court’s warning and disserves conservationist ends by needlessly squandering scarce judicial resources. A bright-line rule better comports with the Court’s guidelines and with the congressional purpose undergirding the EAJA.

Ill

We need go no further.⁷ We are satisfied that EAJA’s doctrinal structure and the weight of better-reasoned authority counsel for reversal in this instance. On the record before us, any material alteration in the parties’ legal relationship came about in a manner distinct from what “Congress sought to promote in the fee statute.” Texas Teachers, 109 S.Ct. at 1493. Hence, plaintiff cannot be deemed a “prevailing party” as EAJA uses that term.

Reversed.

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2 . In its bench decision, the district court’s only direct reference to the point was the following statement: "In order to recover counsel fees, Plaintiff must demonstrate first that she prevailed and not even defendant disputes that.” Although the record does not contain a transcript of the arguments below, appellee has not claimed that the Secretary waived the prevailment defense before the district court.

1 . Initially, Judge Boyle referred the matter to a magistrate who suggested that the Secretary's decision be set aside. The court thereafter considered the question de novo, see 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b), rejected the magistrate’s recommendation, and ruled in the Secretary's favor.

3 . Nadeau was a class action suit brought under 42 U.S.C. § 1983. Hence, its tenor emphasizes the plaintiff's burden. In an EAJA case, a successful defendant can as easily become a prevailing party. See 28 U.S.C. § 2412(d)(1)(A) (authorizing award of fees in "any civil action ... brought by or against the United States”) (emphasis supplied).

4 . Our remand order was entered on April 3, 1985. The record is absolutely silent as to what transpired from that time until the Secretary notified Guglietti that her "payments should have continued.” That notice, which we have annexed as an appendix, was sent over two years later. It says that the Secretary's decision to continue paying was “based on information we have now " (emphasis supplied), perhaps implying that more recent medical reports were considered. But, there is no way we can tell on the record as presented by the parties.

5 . In McDonald, a class action suit challenging the Secretary’s severity test, plaintiffs had won a court-ordered remand. The Secretary subsequently changed the applicable administrative standard. We affirmed a finding that plaintiffs were prevailing parties, distinguishing Truax because, in McDonald, "the remand resulted not from a change in the law [as in Truax], but from the courts’ concern that HHS had applied the severity test improperly.” 884 F.2d at 1475. McDonald, although not in point, suggests that Truax, on its own merits — merits identical to those presented in the instant case — was correctly decided. We also note that Rhoten v. Bowen, 854 F.2d 667 (4th Cir.1988), relied on by appel-lee, seems to us to be cast in the McDonald mold. See id. at 668-69 (describing court-ordered remand prior to Reform Act’s passage).

6 . We note, too, that under the catalyst theory a claimant's showing of causal relationship between suit and relief "is only half of [the] bat-tie.” Nadeau, 581 F.2d at 281. If the government "acted gratuitously,” that is, if Guglietti’s action could be considered "frivolous, unreasonable, or groundless,” id. (citation omitted), her suit could not be deemed a catalyst. Thus, appellee's case-specific approach also conflates the catalyst theory’s two prongs.

7 . We neither reach, nor take any view of, questions such as whether (1) the government’s original decision to terminate Guglietti’s benefits was "substantially justified,” or (2) "special circumstances" exist which would make a fee award "unjust.” See 28 U.S.C. § 2412(d)(1)(A).