Ward v. United States Postal Service

672 F.3d 1294, 2012 WL 762950, 2012 U.S. App. LEXIS 5121

• Court: Court of Appeals for the Federal Circuit
• Decided: March 12, 2012
• Docket: 2010-3021
• Status: Published

Opinions

Concurring opinion filed by Circuit Judge PROST, in which Chief Judge RADER joins. Opinion concurring in the judgment filed by Circuit Judge DYK.

ON APPLICATION FOR ATTORNEY FEES

PER CURIAM.

ORDER

Thomas O. Ward applies for an award of attorney’s fees and expenses under the Equal Access to Justice Act, 28 U.S.C. § 2412. Because Mr. Ward qualifies as a “prevailing party,” we grant his request.

I

On August 19, 2008, Mr. Ward, a maintenance mechanic for the U.S. Postal Service (“Agency”), was involved in an incident with a supervisor in which he shouted, acted in a manner perceived as threatening, and disobeyed instructions to remain in the supervisor’s office. After this incident, the Agency asserted an “Improper Conduct” charge against Mr. Ward and issued a Notice of Proposed Removal letter. The letter referenced no other misconduct aside from that associated with the August 19, 2008 event.

A deciding official subsequently issued a final decision letter removing Mr. Ward from his position as a maintenance mechanic. Mr. Ward appealed from this decision to the Merit Systems Protection Board (“Board”). At a hearing before the administrative judge, it became clear for the first time that the deciding official, in issuing his removal penalty, relied on other instances of misconduct by Mr. Ward not associated with the August 19, 2008 incident. In particular, the deciding official testified that he had ex parte communications with three of Mr. Ward’s supervisors and one manager, learning from those communications that Mr. Ward had previously exhibited “loud, belligerent, [and] intimidating behavior.” Moreover, the deciding official represented that he considered these past instances of misconduct in his Douglas factor analysis and that these past actions influenced his decision to remove Mr. Ward.¹

While the Board found error in the deciding official’s consideration of the past instances of misconduct, it ultimately sustained the removal penalty. In particular, the Board performed an independent Douglas factor analysis in its final decision without considering the past misconduct, concluding that the removal penalty was still reasonable. Mr. Ward appealed the Board’s final decision to this court, arguing that because the Notice of Proposed Removal letter only addressed the August 19, 2008 incident, he was not provided an opportunity to rebut the other misconduct allegations.

On appeal, this court vacated, concluding that the Board committed two errors. “First, the Board erred in failing to address the due process concerns arising out of the Deciding Official’s ex parte communications regarding Ward’s alleged prior instances of misconduct, which ... played a role in [the] penalty determination.” Ward v. U.S. Postal Serv., 634 F.3d 1274, 1279 (Fed.Cir.2011). Specifically, the Board was required to “analyze the Deciding Official’s ex parte communications under the Stone framework to determine whether Ward’s due process rights were violated” but failed to do so. Id. Therefore, we remanded the case to the Board for that purpose, stating that “[i]f the Board finds that the [ex parte] communications did introduce new and material information in violation of Ward’s due process rights, Ward must be afforded a ‘constitutionally correct removal procedure.’” Id. at 1280.

The Board committed its second error when it attempted to cure an underlying Agency procedural error (i.e., an error committed by the U.S. Postal Service). Specifically, the Agency initially erred by improperly considering Ward’s alleged past instances of misconduct without referencing those incidents in the Notice of Proposed Removal. Id. at 1281. “Despite recognizing this procedural error, the Board erred in concluding that it could ‘remedy the error’ by performing an independent analysis of the Douglas factors to determine whether the ‘removal [was] within the bounds of reasonableness.’ ” Id. “Instead, the Board was required to run a harmless error analysis to determine whether the procedural error required reversal.” Id. On remand we instructed the Board to analyze whether the Agency’s procedural error was harmful, but only if the Board first found that the deciding official’s reliance on the ex parte communications caused a due process violation. Id. at 1282-83.

After our remand, the Board remanded the case to the administrative judge for further factual findings. The proceedings were subsequently suspended because the parties entered into settlement discussions.² Mr. Ward now seeks attorney’s fees under 28 U.S.C. § 2412(d) for the expenses incurred solely in relation to his prior appeal before this court. He properly filed his application here in the first instance. Fed. Cir. R. 47.7; see also Ramos v. Dep’t of Justice, 552 F.3d 1356 (Fed.Cir.2009).

II

Under our legal system, parties ordinarily bear their own attorney’s fees (i.e., the prevailing party is not automatically entitled to collect from the loser). Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 602, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001). Congress, however, has statutorily authorized an award of attorney’s fees to a prevailing party in some instances. For example, in the Equal Access to Justice Act (“EAJA”), Congress authorized prevailing parties to collect fees in actions against the United States provided that certain requirements are met. 28 U.S.C. § 2412(d)(1)(A).

Specifically, § 2412(d) states: [ejxcept as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), 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). Thus, fees can only be awarded to “prevailing part[ies]” under EAJA if the government’s position in the case was not “substantially justified,” if no “special circumstances make an award unjust,” and if the party seeking the award timely files its application for fees to the court. Comm’r, INS v. Jean, 496 U.S. 154, 158, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990). Only the “prevailing party” element is at issue in this appeal, as the government does not dispute Mr. Ward’s contention that the other elements are met. In his application for attorney’s fees, Mr. Ward asserts that he is a “prevailing party” under EAJA based on the remand he obtained from this court to the Merit Systems Protection Board. Whether Mr. Ward qualifies as a “prevailing party” under EAJA is a question of law. See Former Emps. of Motorola Ceramic Prods, v. United States, 336 F.3d 1360, 1363 (Fed. Cir.2003) (Rader, J., dissenting).

The Supreme Court provided guidance on the meaning of the “prevailing party” term in Buckhannon, 532 U.S. at 598, 121 S.Ct. 1835. In particular, the Court explained that “ ‘[rjespect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail.’ ” Id. at 603, 121 S.Ct. 1835 (quoting Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987)). According to the Court, the extent of this relief must rise to the level of “enforceable judgments on the merits and court-ordered consent decrees creating] [a] ‘material alteration of the legal relationship of the parties.’ ” Id. at 604, 121 S.Ct. 1835. Under this rule, neither “an interlocutory ruling that reverses a dismissal for failure to state a claim” nor a “reversal of a directed verdict” qualifies a plaintiff for prevailing party status. Id. at 605, 121 S.Ct. 1835.

In reaching the conclusion that it did, Buckhannon explicitly overruled what had become known as the “catalyst theory.” Id. at 610, 121 S.Ct. 1835. Under this theory, parties “could obtain a fee award if their suit acted as a ‘catalyst’ for the change they sought, even if they did not obtain a judgment or consent decree” in their favor. Id. at 625-26, 121 S.Ct. 1835 (Ginsburg, J., dissenting). Federal courts had been applying the catalyst theory to hold that a party could qualify as “prevailing” so long as its ends were accomplished because of the litigation. The rule created by the majority in Buckhannon dismantled the catalyst theory by requiring enforceable judgments on the merits or court-ordered consent decrees.

Notably, EAJA was not specifically at issue in Buckhannon, as that case involved the “prevailing party” term from a different attorney’s fees statute. This court has concluded, however, that Buckhannon applies with equal force in the EAJA context. Brickwood Contractors, Inc. v. United States, 288 F.3d 1371, 1379 (Fed.Cir.2002); see also Former Employees, 336 F.3d at 1364 (explaining that the Supreme Court “has interpreted the phrase ‘prevailing party consistently in all federal fee-shifting statutes.”).

Under Buckhannon, a remand contained entirely within the federal judicial system (e.g., a remand from a federal appellate court to a district court) “at least in most circumstances, does not constitute relief on the merits for the purposes of the fee-shifting statutes.” Former Employees, 336 F.3d at 1364. As mentioned above, however, this appeal presents a different type of remand: a remand from a federal court to an agency.

We addressed whether an agency remand can result in prevailing party status under EAJA in Former Employees, 336 F.3d at 1360. In that ease, two employees who had been dismissed from their jobs applied to the Department of Labor (“DOL”) for benefits. Id. at 1362. The DOL denied these applications, and the employees subsequently appealed to the Court of International Trade. Id. Finding error in the DOL’s determination, the Court of International Trade remanded the case back to the DOL for reconsideration. Id. Notably, the Court of International Trade retained jurisdiction over the matter during remand. Id. The employees eventually obtained the benefits they sought, after which they applied for attorney’s fees under EAJA. Id. at 1363.

In analyzing whether the remand to the DOL constituted relief on the merits, we distinguished remands to administrative agencies from remands contained entirely within the federal court system. Id. at 1364-65. We relied on two Supreme Court cases in doing so: Sullivan v. Hudson, 490 U.S. 877, 109 S.Ct. 2248, 104 L.Ed.2d 941 (1989), and Shalala v. Schaefer, 509 U.S. 292, 113 S.Ct. 2625, 125 L.Ed.2d 239 (1993).

In summarizing Hudson, we explained that

a district court ordered a remand to the Secretary of Health and Human Services for reconsideration of a Social Security benefits claim, and retained jurisdiction. On remand the claimant was successful in obtaining benefits. The Supreme Court held that that claimant was a prevailing party because it succeeded before the agency after the remand. The Court explained that because there would be no final judgment until the case was decided on remand “for purposes of EAJA,” the claimant’s status as “prevailing party” was “dependent on the successful completion of the remand proceedings before the Secretary. Moreover, the remanding court continues to retain jurisdiction over the action within the meaning of EAJA and may exercise that jurisdiction to determine if its legal instructions on remand have been followed by the Secretary.” The Court therefore held that “where administrative proceedings are intimately tied to the resolution of judicial action and necessary to the attainment of the results Congress sought to promote by providing for fees, they should be considered part and parcel of the action for which fees may be awarded.”

Former Employees, 336 F.3d at 1365-66 (quoting Hudson, 490 U.S. at 877-88, 109 S.Ct. 2248 (internal citations omitted)).

In summarizing Schaefer, we explained that the case involved the question of

when a “final judgment” had been entered for the purposes of starting EAJA’s 30-day time period for filing an attorneys’ fees application. The district court had remanded the case for reconsideration by the Secretary of Health and Human Services but had not retained jurisdiction. When the district court retains jurisdiction, the Supreme Court held, the time period begins after the district court dismisses. When it does not retain jurisdiction, the time period begins to run with the remand order itself. The Court emphasized that when a district court “reverses] the Secretary’s denial of benefits” and remands without retaining jurisdiction, the claimant is a “prevailing party” for the purposes of EAJA because “the plaintiff has succeeded on a[ ] significant issue in litigation which achieved some of the benefit sought in bringing suit.”

Former Employees, 336 F.3d at 1366 (quoting Schaefer, 509 U.S. at 298-99, 302, 113 S.Ct. 2625 (1993) (internal citations omitted)).

Relying on Hudson and Schaefer, we formulated the following rule in Former Employees:

where the plaintiff secures a remand requiring further agency proceedings because of alleged error by the agency, the plaintiff qualifies as a prevailing party (1) without regard to the outcome of the agency proceedings where there has been no retention of jurisdiction by the court, or (2) when successful in the remand proceedings where there has been a retention of jurisdiction.

Former Employees, 336 F.3d at 1366. As explained above, the plaintiffs in Former Employees were successful on remand in a case where the remanding court retained jurisdiction. Id. at 1362-63. Therefore, they qualified as “prevailing parties” under the second prong of the rule stated above. Id. at 1367.

The first prong of the test articulated in Former Employees was not directly applicable to the facts of that case. Thereafter, however, prong one was applied by our court in Kelly v. Nicholson. 463 F.3d 1349 (Fed.Cir.2006) (Rader, J., dissenting). Kelly involved a veteran diagnosed with two conditions: olivopontocerebellar atrophy (“OPCA”) and ataxia. The Regional Office and the Board of Veterans’ Appeals both denied the veteran’s claim for benefits, but failed to consider the ataxia evidence before doing so. Id. at 1352. The veteran subsequently appealed to the Court of Appeals for Veterans Claims (“Veterans Court”) and obtained a remand. Id. As we later explained, the Board of Veterans’ Appeals erred because it violated a statutory obligation to consider the ataxia evidence before rejecting the veteran’s service connection claim. Id. at 1354-55.

After obtaining his remand, the veteran applied for attorney’s fees. Id. at 1352. Prong one of the Former Employees rule was at issue because the Veterans Court did not retain jurisdiction over the remand. Id. at 1353. Therefore, the ultimate outcome of the veteran’s case was irrelevant in the attorney’s fees analysis; the focus was solely on whether agency error caused the remand. We concluded that the VA’s failure to consider the ataxia evidence was a sufficient agency error to qualify the veteran for prevailing party status under EAJA. Id. at 1355.

Notably, our precedent does not characterize every agency remand as a grant of relief on the merits under Former Employees. Indeed, we have held that remands not rooted in agency error do not result in prevailing party status. Such remands include: a remand to address the impact of a newly-enacted statute on a case, Vaughn v. Principi 336 F.3d 1351, 1353 (Fed.Cir.2003); a remand to consider newly acquired evidence, Id. at 1354; and a remand where the Board of Veterans’ Appeals arguably misapplies a federal regulation but where the Veterans Court does not “explicitly or implicitly predicate[]” the remand order on this alleged misapplication. Davis v. Nicholson, 475 F.3d 1360, 1364 (Fed.Cir.2007). Additionally, in Gurley v. Peake, 528 F.3d 1322, 1324 (Fed.Cir. 2008), a veteran obtained a remand because the Board of Veterans’ Appeals failed to properly consider the merits of three claims at once. Instead, the Board of Veterans’ Appeals ruled on the merits of one claim while declining to address the other two. Id. We found that the “sole basis” for this remand was “judicial economy” rather than agency error and concluded that “[ujnder these circumstances, [the veteran] cannot be considered a ‘prevailing party’ under EAJA.” Id. at 1328.

Ill

In the present matter, since we did not retain jurisdiction over our remand of Mr. Ward’s case to the Merit Systems Protection Board, prong one of the Former Employees rule applies. See Former Employees, 336 F.3d at 1366. Thus, the outcome of the remand is inconsequential, and we focus our analysis solely on whether agency error caused the remand.

Mr. Ward’s remand was clearly caused by administrative error. As we explained in our previous opinion, the Merit Systems Protection Board failed to analyze the deciding official’s ex parte communications under the Stone framework, an analysis intended to determine whether Mr. Ward’s due process rights were violated. Ward, 634 F.3d at 1279. Next, the Board failed to properly address a procedural error committed by the Agency. Specifically, the Agency erred by considering instances of misconduct not mentioned in the Notice of Proposed Removal when determining Mr. Ward’s penalty. Id. at 1281. The Board then erred by concluding that it could remedy the Agency’s error by performing an independent analysis under the Douglas factors. Id. Instead, the Board was required to perform a harmless error analysis to determine whether the Agency’s procedural error required reversal. Id. Because these administrative errors resulted in Mr. Ward’s remand, we conclude that Mr. Ward qualifies as a prevailing party under EAJA. See Kelly, 463 F.3d at 1353; Former Employees, 336 F.3d at 1366.

IV

For the foregoing reasons, we hold that Mr. Ward is a “prevailing party” under EAJA and is therefore entitled to the attorney’s fees incurred during his Federal Circuit appeal.

The court, PER CURIAM determines as follows:

It Is Ordered That:

Mr. Ward is a “prevailing party” under EAJA and is therefore entitled to the attorney’s fees incurred during his Federal Circuit appeal.

1 . The Douglas factors, which apply in adverse action cases, focus the decision maker on the relevant facts when deciding the penalty. See Douglas v. Veterans Admin., 5 MSPB 313, 5 M.S.P.R. 280 (1981).

2 . Mr. Ward ultimately settled his case.