United States Court of Appeals,
Fifth Circuit.
Nos. 93-3096, 93-3139
Summary Calendars.
Jerry MILTON, Plaintiff-Appellant,
v.
Donna E. SHALALA, Secretary, Department of Health and Human Services, Defendant-Appellee.
Hopsey READO, Plaintiff-Appellant,
Donna E. SHALALA, Secretary, Department of Health and Human Services, Defendant-Appellee.
April 5, 1994.
Appeals from the United States District Court for the Middle District of Louisiana.
Before DAVIS, JONES, and DUHÉ, Circuit Judges.
DUHÉ, Circuit Judge:
Jerry Milton and Hopsey Reado appeal from the judgments of the
district court denying their petitions for attorneys' fees under
the Equal Access to Justice Act ("EAJA"). 28 U.S.C.A. § 2412(d)
(West Supp.1993). Agreeing with the magistrate judge and the
district court that Appellants are not prevailing parties for
purposes of EAJA, we affirm.
While Appellants were seeking judicial review of denial of
their social security disability benefits, Congress enacted the
Social Security Disability Benefits Reform Act of 1984, Pub.L. No.
98-460, 98 Stat. 1794 (1984) (codified as amended in scattered
sections of 42 U.S.C.). The Reform Act mandated that then pending
1 judicial actions be remanded to the Secretary of Health and Human
Services for reconsideration under a new standard set forth in the
Reform Act for determining whether disability benefits should be
terminated. The Reform Act, § 2(d)(2), 42 U.S.C.A. § 423 note at
436-37 (West 1991). Appellants' actions were so remanded upon
motions of the Secretary. On remand both Appellants were awarded
continuing benefits under the new standard. They then petitioned
for attorneys' fees pursuant to EAJA, claiming that they were
"prevailing parties" in their litigation with the Secretary.
The sole issue before us is whether Appellants are entitled
to costs and attorneys' fees pursuant to EAJA as "prevailing
parties" in their civil actions.1 A party prevails by succeeding
on "any significant issue in litigation which achieves some of the
benefit the parties sought in bringing suit." Hensley v.
Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40
(1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st
Cir.1978)). Some circuit courts have concluded that fees should be
awarded a claimant who obtains benefits in a case remanded under
the Reform Act either because his law suit played a role in causing
the reinstatement of benefits or because he would have won in
district court if his claim had not been remanded. We have not
previously addressed this issue. We examine each of these
1 28 U.S.C. § 2412(d)(1). A party is entitled to fees under EAJA if four separate requirements are met: 1) it is the prevailing party, 2) it files timely fee application, 3) the position of the government was not substantially justified, and 4) no special circumstances make an award unjust. 28 U.S.C.A. § 2412(d). This case is decided under the first requirement.
2 rationales in turn.
The "Necessary Cause" Theory: Did the Law Suits Cause Appellants' Victory?
The Sixth Circuit has held that such a claimant's law suit was
a necessary cause of the favorable redetermination of the
claimant's rights, providing a catalyst for the restoration of
benefits. Perket v. Secretary of Health & Human Servs., 905 F.2d
129, 134-35 (6th Cir.1990) (alternative holding). Recognizing that
Perket's judicial action was necessary for the remand, the court
found a sufficient link between the litigation and the restoration
of benefits to justify characterizing the claimant as a party
succeeding in litigation. Id. at 135. This rationale has also
been called the "but for" causation theory.
Perket's case (like Appellants' cases) was remanded under the
Reform Act. His suit was indeed necessary to his eventual receipt
of benefits: had the suit appealing the agency action not been
pending when the Reform Act was enacted, the final agency decision
denying benefits would have been res judicata. See Reform Act, §
2(d)(2), 42 U.S.C.A. § 423 note at 436-37 (West 1991) (providing
for remand to the Secretary for redetermination under the new
standard if judicial review was pending on September 19, 1984);2
Perket, 905 F.2d at 135 (res judicata bars redetermination if
Secretary's final decision is not challenged via judicial review)
2 The remands of Appellants' judicial actions were ordered because the actions were pending on the date specified in the Reform Act. We express no opinion on the correctness of Rhoten v. Bowen, 854 F.2d 667, 669-70 (4th Cir.1988), in which claimants had obtained court-ordered remands prior to the passage of the Reform Act.
3 (citing Bullyan v. Heckler, 787 F.2d 417, 420 (8th Cir.1986)).
Though the suits are a necessary cause of Appellants'
success, we do not think their suits are a sufficient cause of
success to characterize the Appellants as prevailing parties.
Rather, we agree with Guglietti v. Secretary of Health & Human
Services, 900 F.2d 397 (1st Cir.1990), and Hendricks v. Bowen, 847
F.2d 1255 (7th Cir.1988). "[T]he mere obtaining of a remand
directed by Congress is not reflective of success on any issue in
plaintiff's suit.... Certainly, the mere temporal coincidence
between passage of the Reform Act and the pendency of [a
claimant's] appeal, standing alone, seems too frail a link between
bottom-line success and litigation." Guglietti, 900 F.2d at 400;
accord Hendricks, 847 F.2d at 1259 (Easterbrook, J., concurring)
("If the award sprang from new legal standards then [the claimant]
was a fortuitous beneficiary, and serendipity is not a reason for
rewarding lawyers.").
The majority in Hendricks also rejected the hypertechnical
argument that "but for" causation was adequate to show a sufficient
causal connection between the litigation and the favorable
redetermination of benefits. Hendricks, 847 F.2d at 1258.
Hendricks concluded that the "proximate cause of [the claimant's]
victory was the congressional enactment of a standard under which
he was entitled to relief." Id. The court recognized that the
reason for reinstatement of benefits was not that the Secretary
realized that he was wrong or decided to compromise, but rather
that "Congress mandated reconsideration of all such currently
4 pending claims under a newly enacted standard." Id.; accord
Petrone v. Secretary of Health & Human Servs., 936 F.2d 428, 430
(9th Cir.1991) (claimant "did not win reinstatement in the
courtroom; she won because Congress changed the law."), cert.
denied, --- U.S.
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United States Court of Appeals,
Fifth Circuit.
Nos. 93-3096, 93-3139
Summary Calendars.
Jerry MILTON, Plaintiff-Appellant,
v.
Donna E. SHALALA, Secretary, Department of Health and Human Services, Defendant-Appellee.
Hopsey READO, Plaintiff-Appellant,
Donna E. SHALALA, Secretary, Department of Health and Human Services, Defendant-Appellee.
April 5, 1994.
Appeals from the United States District Court for the Middle District of Louisiana.
Before DAVIS, JONES, and DUHÉ, Circuit Judges.
DUHÉ, Circuit Judge:
Jerry Milton and Hopsey Reado appeal from the judgments of the
district court denying their petitions for attorneys' fees under
the Equal Access to Justice Act ("EAJA"). 28 U.S.C.A. § 2412(d)
(West Supp.1993). Agreeing with the magistrate judge and the
district court that Appellants are not prevailing parties for
purposes of EAJA, we affirm.
While Appellants were seeking judicial review of denial of
their social security disability benefits, Congress enacted the
Social Security Disability Benefits Reform Act of 1984, Pub.L. No.
98-460, 98 Stat. 1794 (1984) (codified as amended in scattered
sections of 42 U.S.C.). The Reform Act mandated that then pending
1 judicial actions be remanded to the Secretary of Health and Human
Services for reconsideration under a new standard set forth in the
Reform Act for determining whether disability benefits should be
terminated. The Reform Act, § 2(d)(2), 42 U.S.C.A. § 423 note at
436-37 (West 1991). Appellants' actions were so remanded upon
motions of the Secretary. On remand both Appellants were awarded
continuing benefits under the new standard. They then petitioned
for attorneys' fees pursuant to EAJA, claiming that they were
"prevailing parties" in their litigation with the Secretary.
The sole issue before us is whether Appellants are entitled
to costs and attorneys' fees pursuant to EAJA as "prevailing
parties" in their civil actions.1 A party prevails by succeeding
on "any significant issue in litigation which achieves some of the
benefit the parties sought in bringing suit." Hensley v.
Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40
(1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st
Cir.1978)). Some circuit courts have concluded that fees should be
awarded a claimant who obtains benefits in a case remanded under
the Reform Act either because his law suit played a role in causing
the reinstatement of benefits or because he would have won in
district court if his claim had not been remanded. We have not
previously addressed this issue. We examine each of these
1 28 U.S.C. § 2412(d)(1). A party is entitled to fees under EAJA if four separate requirements are met: 1) it is the prevailing party, 2) it files timely fee application, 3) the position of the government was not substantially justified, and 4) no special circumstances make an award unjust. 28 U.S.C.A. § 2412(d). This case is decided under the first requirement.
2 rationales in turn.
The "Necessary Cause" Theory: Did the Law Suits Cause Appellants' Victory?
The Sixth Circuit has held that such a claimant's law suit was
a necessary cause of the favorable redetermination of the
claimant's rights, providing a catalyst for the restoration of
benefits. Perket v. Secretary of Health & Human Servs., 905 F.2d
129, 134-35 (6th Cir.1990) (alternative holding). Recognizing that
Perket's judicial action was necessary for the remand, the court
found a sufficient link between the litigation and the restoration
of benefits to justify characterizing the claimant as a party
succeeding in litigation. Id. at 135. This rationale has also
been called the "but for" causation theory.
Perket's case (like Appellants' cases) was remanded under the
Reform Act. His suit was indeed necessary to his eventual receipt
of benefits: had the suit appealing the agency action not been
pending when the Reform Act was enacted, the final agency decision
denying benefits would have been res judicata. See Reform Act, §
2(d)(2), 42 U.S.C.A. § 423 note at 436-37 (West 1991) (providing
for remand to the Secretary for redetermination under the new
standard if judicial review was pending on September 19, 1984);2
Perket, 905 F.2d at 135 (res judicata bars redetermination if
Secretary's final decision is not challenged via judicial review)
2 The remands of Appellants' judicial actions were ordered because the actions were pending on the date specified in the Reform Act. We express no opinion on the correctness of Rhoten v. Bowen, 854 F.2d 667, 669-70 (4th Cir.1988), in which claimants had obtained court-ordered remands prior to the passage of the Reform Act.
3 (citing Bullyan v. Heckler, 787 F.2d 417, 420 (8th Cir.1986)).
Though the suits are a necessary cause of Appellants'
success, we do not think their suits are a sufficient cause of
success to characterize the Appellants as prevailing parties.
Rather, we agree with Guglietti v. Secretary of Health & Human
Services, 900 F.2d 397 (1st Cir.1990), and Hendricks v. Bowen, 847
F.2d 1255 (7th Cir.1988). "[T]he mere obtaining of a remand
directed by Congress is not reflective of success on any issue in
plaintiff's suit.... Certainly, the mere temporal coincidence
between passage of the Reform Act and the pendency of [a
claimant's] appeal, standing alone, seems too frail a link between
bottom-line success and litigation." Guglietti, 900 F.2d at 400;
accord Hendricks, 847 F.2d at 1259 (Easterbrook, J., concurring)
("If the award sprang from new legal standards then [the claimant]
was a fortuitous beneficiary, and serendipity is not a reason for
rewarding lawyers.").
The majority in Hendricks also rejected the hypertechnical
argument that "but for" causation was adequate to show a sufficient
causal connection between the litigation and the favorable
redetermination of benefits. Hendricks, 847 F.2d at 1258.
Hendricks concluded that the "proximate cause of [the claimant's]
victory was the congressional enactment of a standard under which
he was entitled to relief." Id. The court recognized that the
reason for reinstatement of benefits was not that the Secretary
realized that he was wrong or decided to compromise, but rather
that "Congress mandated reconsideration of all such currently
4 pending claims under a newly enacted standard." Id.; accord
Petrone v. Secretary of Health & Human Servs., 936 F.2d 428, 430
(9th Cir.1991) (claimant "did not win reinstatement in the
courtroom; she won because Congress changed the law."), cert.
denied, --- U.S. ----, 112 S.Ct. 1161, 117 L.Ed.2d 409 (1992);
Guglietti, 900 F.2d at 400 ("but for" argument confuses a condition
of recovery with a cause of recovery); Shepard v. Sullivan, 898
F.2d 1267, 1272 (7th Cir.1990) (change in governing law causing
Secretary to change his initial determination breaks the chain of
causation and deprives plaintiff of prevailing party status);
Truax v. Bowen, 842 F.2d 995, 997 (8th Cir.1988) ("but for"
argument does not establish causal connection between litigation
and Secretary's remedial action). In the present cases the
Appellants won because of a change in the law; we therefore reject
their argument that they prevailed because of their law suits.
The Catalyst Theory: Did the Suits Cause the Law to Change?
A second causation theory rationalizing a fee award under
EAJA is the "catalyst" theory. This theory recognizes that though
a claimant may not succeed in court if a settlement or remedial
action renders the law suit moot, he may nevertheless be considered
a prevailing party if his law suit was a catalyst in attaining
remedial action. For example, as Perket recognized, some courts
have considered that a claimant's law suit was a catalyst in
prompting Congress to provide the desired relief by enacting the
Reform Act. Perket, 905 F.2d at 134 (citing Vitale v. Secretary of
Health & Human Servs., 673 F.Supp. 1171, 1177 (N.D.N.Y.1987)); see
5 also Robinson v. Bowen, 679 F.Supp. 1011, 1014 (D.Kan.1988)
(claimant's suit and thousands like it directly contributed to
Congress' passing the Reform Act), aff'd per curiam, 867 F.2d 600
(10th Cir.1989).
The mere possibility that Congress acted because of an
individual claimant's suit (or reacted to a large number of similar
suits) is too speculative in our view considering the many
influences upon members of Congress in casting their votes. We
agree with the cases that have refused to credit the change in law
to a claimant's individual law suit and found the nexus between
Congress's action and the law suit too attenuated. E.g., Petrone,
936 F.2d at 430; Guglietti, 900 F.2d at 401-02; Hendricks, 847
F.2d at 1258; Truax, 842 F.2d at 997.
The "Inevitable Victory" Theory: If Merits Had Been Reached
Perket also held that the claimant was the prevailing party
because of his "inevitable victory." Perket, 905 F.2d at 133
(alternate holding). Under this theory, the court surmised that,
absent the fortuitous passage of the Reform Act and the remand it
compelled, the claimant's benefits would have been restored by the
district court. Id.; see also Hendricks, 847 F.2d at 1260-61
(Easterbrook, J., concurring) (claimant should recover fees under
EAJA if he would have prevailed in quest for benefits and recovered
fees had the Reform Act never existed).
We reject this argument because of its "essential fallacy" of
confusing two separate requirements for imposition of fees under
EAJA, namely, that the private litigant prevail and that the
6 government's position lack substantial justification.3 See
Guglietti, 900 F.2d at 402. "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." Id. Where an intervening change
in the law and not the litigation causes the award, we need not
inquire into whether the claimant would have prevailed under the
old standards to determine whether the claimant is a prevailing
party. See Shepard, 898 F.2d at 1273. Because Appellants are not
prevailing parties, we do not review the relative merits of the
parties' litigation positions.
We conclude that the filing of the complaints in these cases
was necessary but not sufficient for the favorable redetermination
of Appellants' benefits. The enactment of the Reform Act was the
real reason for the awards on remand. We also reject Appellants'
contentions that their law suits prompted remedial action by
Congress. The purpose of EAJA is to encourage private litigants to
seek review of unreasonable government conduct or to vindicate
3 This confusion is manifest in Gowen v. Bowen, 855 F.2d 613 (8th Cir.1988). The district court had denied fees under the "substantial justification" element of EAJA. See id. at 615. After finding error in the district court's application of the "substantial justification" test, id. at 616-17, the Eighth Circuit confused the two tests by noting that the claimant was a "prevailing party" simply because the district court "would have found" the Secretary's position to be without substantial justification if it had reached the merits of the claimant's action. Id. at 617 n. 3.
7 their rights by challenging agency action that they would otherwise
comply with to avoid litigation costs. Herron v. Bowen, 788 F.2d
1127, 1129 (5th Cir.1986). Rewarding private parties for being the
fortuitous beneficiary of a change in statutory rights does not
meet that purpose.
AFFIRMED.