Michelle Dewalt v. Louis W. Sullivan, Secretary of Health and Human Services

963 F.2d 27, 1992 U.S. App. LEXIS 11550

• Court: Court of Appeals for the Third Circuit
• Decided: May 21, 1992
• Docket: 91-5199
• Status: Published

Opinions

OPINION OF THE COURT

FULLAM, Senior District Judge.

Plaintiff-appellee, Michelle Dewalt, established her entitlement to an award of counsel fees under the Equal Access to Justice Act, 28 U.S.C. § 2414, after an eight-year struggle to obtain SSI benefits under Title XVI of the Social Security Act. The district court awarded fees calculated at the rate of $136.02 per hour. The narrow but important issue presented on this appeal is whether that hourly rate exceeds the maximum permissible under the statute.

The relevant statute provides:

The amount of fees awarded under this subsection shall be based upon prevailing market rates for the kind and quality of services furnished, except that ... (ii) attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee. 28 U.S.C. § 2412(d)(1)(A) (emphasis added).

The question to be decided is which of several possible methods of determining “an increase in the cost of living” is appropriate for upward adjustment of the $75 per-hour statutory cap on attorney’s fees.

Beginning in the World War I era, the Bureau of Labor Statistics has published a series of indexes of consumer prices based upon its collection of data through various sampling techniques. Regular publication of a national index began in 1921, under the general title “Cost of Living”. In 1940, the name was changed to “Indexes of the Cost of Living of Wage-Earners and Lower-Salaried Workers in Large Cities”, and in 1945, the name was changed to “Consumer Price Index Moderate Income Families in Large Cities”. See B.L.S. Handbook of Methods, at p. 185. In 1978, the coverage was broadened to include all urban consumers, not just wage-earners. This CPI-U, or CPI-ALL as it is commonly referred to, takes into account the buying patterns of professional and salaried workers, part-time workers, the self-employed, the unemployed, and retired persons, as well as wage-earners and clerical workers, and reflects the purchasing habits of approximately 80% of the non-institutionalized population of the United States. See The Consumer Price Index: 1987 Revision, p. 1; B.L.S. Handbook of Methods, p. 154. At some risk of over-simplification, it can be stated that the CPI-ALL incorporates data covering several hundred categories of items, separated into 69 expenditure classes in 7 general categories of expenses: food and beverages, housing, apparel and upkeep, transportation, medical care, entertainment, and other goods and services.

Beginning in 1986, the “other goods and services” category was further refined to include a separate sub-category for personal services, including legal services. The all-items CPI indexes separately record price levels on a national basis, on regional bases, and for 29 local areas. But the legal services component is calculated only on a national basis.

If the statutory cap of $75 per hour had been adjusted upward, in the present case, on the basis of the CPI-ALL index for Southern New Jersey, the maximum rate would have been increased to $105.91 per hour, yielding a total award of $2,965.48. The district court determined, however, that the statutory maximum should be adjusted on the basis of the “personal services” component of the CPI, and on that basis awarded fees at the rate of $136.02 an hour, for a total of $3,308.56.¹ Although the dollar amount in dispute in this case is not great, appellant, understandably, seeks a definitive ruling because of the aggregate impact of attorney’s fee awards in other similar cases.

I. SCOPE OF REVIEW

We review attorney’s fee awards under the EAJA for abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 572, 108 S.Ct. 2541, 2553-54, 101 L.Ed.2d 490 (1988). But the district court’s interpretation and application of the statutory cap presents a question of law, as to which our review is plenary. Or, as it is sometimes expressed, an abuse of discretion occurs “when the trial court uses improper standards or procedures in determining fees, or if it does not properly identify the criteria used for such determination”. Silberman v. Bogle, 683 F.2d 62, 65 (3d Cir.1982).

II. DISCUSSION

Congress has determined that attorney’s fees awarded under the EAJA are to be based upon “prevailing market rates”, but that no fee may be awarded “in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee”. It is clear that the district court increased the statutory cap from $75 per hour to $136.02 per hour solely on the basis of its determination of the level of “increase in the cost of living”; there is no contention that the record justifies an increase on the basis of any “special factor”.

The narrow issue presented is whether the statute permitted the district court to calculate the “cost of living” increase solely on the basis of the personal-services component of the consumer price index. Although the thoughtful and perceptive opinion of the district court sets forth many cogent arguments in support of that position as a policy matter (“beans, corn, and hamburger may have appreciated less than an hour of lawyer’s time, but plaintiffs must shop in the legal market, not the supermarket”, 756 F.Supp. 195, 201), we have concluded that Congress intended a different approach.

We start with the language of the statute itself. Fees are to be calculated at “prevailing market rates,” but the $75 per-hour cap can be raised only on the basis of an increase in “the cost of living”. If only the personal services component of the CPI is used, then the statutory cap is being increased primarily on the basis of increases in prevailing market rates, rather than the overall cost of living. But plainly, if Congress had intended that result, the statute would have provided that “attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in prevailing market rates ... justifies a higher fee”. It is not the province of the judiciary to re-write the statute in that fashion. Congress obviously did not equate “cost of living” with “cost of legal services”, or it would have said so.

The district court concluded that Congress intended, by its “cost of living” reference, to provide successful claimants such as appellee with the same purchasing power in the legal-services market as $75 would have provided in 1981, when the $75 limitation was first imposed. We believe, on the contrary, that Congress was expressing its concept of what a “reasonable” fee ought to be. Congress decided that it was unwilling to recognize as reasonable any fee in excess of $75 per hour, based on the purchasing power of a dollar in 1981. The reasonableness of a fee, as between lawyer and client, takes into account the general purchasing power of money — the lawyer’s cost of living, as well as the client’s. And when Congress provided for an upward “cost of living” adjustment to the cap on such fees, it recognized the general impact of inflation upon the purchasing power of a dollar — in the hands of the lawyer, the client, or anyone else.

Our construction of the statute is consistent with Supreme Court admonition:

We do not think Congress meant that if the rates for all lawyers in the relevant city — or even in the entire country— come to exceed $75 per hour (adjusted for inflation) then that market-minimum rate will govern instead of the statutory cap. To the contrary, the ‘special factor’ formulation suggests Congress thought that $75 an hour was generally quite enough public reimbursement for lawyers’ fees, whatever the local or national market might be. Pierce v. Underwood, 487 U.S. 552, 572, 108 S.Ct. 2541, 2553-54, 101 L.Ed.2d 490 (1988).

Although the precise holding of the Court in that case dealt with the “special factor” of limited availability of qualified attorneys to handle the particular litigation, it is clear that the Court viewed the statute as permitting adjustment of the $75 cap only for general inflation, not for increases in prevailing rates for legal services.

It is, of course, true, as this court recognized in Natural Resources Defense Council v. U.S. EPA, 703 F.2d 700 (3d Cir.1983), that one of the purposes of the EAJA is to encourage challenges to agency action and to provide a disincentive to agencies to prolong the litigation process; and that awarding higher, fully compensatory, fees would better serve these statutory purposes than lesser awards. But it is also true that, in providing the $75 per-hour cap, Congress intended to protect, to some extent, the public fisc, and that waivers of sovereign immunity are to be strictly construed. Congress has decreed that the public fisc shall be vulnerable only to the extent of $75 per hour plus “cost of living” increases since 1981, and we cannot sanction fee awards in excess of that limitation in a quest for the arguable (but probably minimal) greater deterrence a higher award might provide.

It is a fundamental principle of statutory construction that words in a statute are to be given their ordinary meaning unless the context clearly suggests otherwise. Invoking that principle, appellant cites us to the definition of “cost of living” in the American Heritage Dictionary of the English Language (1973) as “the average cost of the basic necessities of life, such as food, shelter, and clothing”. In support of the appellee, it is argued that there is no single accepted definition of the term, and that a more recent dictionary, Random House Dictionary of the English Language — Unabridged (2d ed. 1987), includes within the term “cost of living”, “other necessary or usual goods and services ... considered as a standard by members of a group”. Under either definition, however, it is simply impossible to equate “cost of living” with “cost of legal services”. And it is inconceivable that Congress, in 1981, intended a definition of “cost of living” which would measure it by a single component which was not measured and indexed until 1986.

The interpretation espoused by the dissent — that, once an increase in the cost of living is found to permit exceeding the $75 cap, the amount of the excess need not be measured by the increase in the cost of living — overlooks the significance of the word “justifies” in the statute. In our view, “a higher fee [than the $75 per hour]” cannot be said to be “justifie[d]” by “an increase in the cost of living” unless it is measured by, or at least proportional to, and determined by reference to, the increase in “the cost of living”.

The only reported appellate case squarely on point is the recent decision of the Fourth Circuit in Sullivan v. Sullivan, 958 F.2d 574 (4th Cir.1992), in which the court rejected the holding of the district court in our case, and held that the personal services index should not be used in increasing the $75 cap, but rather a broad-based cost of living index such as CPI-ALL. For the reasons discussed above, we agree with the Fourth Circuit on this issue. See also, Ofray v. Secretary, 741 F.Supp. 53 (W.D.N.Y.1990). But see, Malick v. Heckler, C.A. 85-4946, 1989 WL 831 *6 (E.D.Pa. Jan. 9, 1989), Davie v. Sullivan, No. 88-1361T, 1990 WL 274630 (W.D.N.Y., Feb. 9, 1990), and Petition of Duggan, 734 F.Supp. 705 (D.S.C.1990).

III. CONCLUSION

We conclude that, in awarding fees pursuant to § 2412(d) of the EAJA, the court is required to apply the statutory cap, as affected by general inflation since 1981, and that the CPI-ALL index, rather than the personal-services component of that index, provides an appropriate measure of such inflation. The district court’s use of the personal services component index in calculating the amount by which the statutory cap could be increased was an error of law. On the record before the district court, fees should have been calculated on the basis of an hourly rate not exceeding $105.91 per hour. The judgment appealed from will be vacated, and the case remanded to the district court for further proceedings consistent with the views expressed in this opinion.

1 . For services rendered before 1986, the court applied the “other goods and services” index since the separate index for legal services did not become available until 1986.