1994 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-7-1994

Kadelski v. Sullivan

Precedential or Non-Precedential:

Docket 93-1891

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Recommended Citation

"Kadelski v. Sullivan" (1994). 1994 Decisions. Paper 77.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

____________ 

 NO. 93-1891 

____________ 

WALTER KADELSKI, 

 Appellant 

v. 

 LOUIS W. SULLIVAN, Secretary 

 of Health and Human Services 

 

____________ 

Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

D.C. No. 89-cv-04430 

____________ 

Submitted Under Third Circuit LAR 34.1(a) March 24, 1994 

Before: HUTCHINSON, ROTH, and ROSENN, Circuit Judges

 Opinion Filed July 8, l994 

____________ 

THOMAS R. YORKO, ESQ. 

Bomze & Yorko, P.C. 

Suite 1300 

140l Arch Street 

Philadelphia, PA 19102 

 Attorney for Appellant 

STEVEN M. ROLLINS, ESQ. 

Department of Health & Human Services 

3535 Market Street 

Room 9100 

Philadelphia, PA 19101 

 Attorney for Appellee 

____________ 

OPINION OF THE COURT 

____________ 

ROSENN, Circuit Judge. 
2 

 This appeal presents a procedural issue, the 

determination of which has significant substantive consequences: 

does a remand order to a federal administrative agency by a 

United States District Court adopting the Report and 

Recommendation of a magistrate judge, which constitutes a 

judgment, require that it be set forth in a separate document as 

provided by Federal Rule of Civil Procedure 58? The district 

court held that its order need not be stated in a separate 

document and therefore denied as untimely the appellant's 

application for attorney's fees under the Equal Access to Justice 

Act (EAJA), 28 U.S.C. § 2412(d). Appellant timely appealed. We 

vacate and remand. 

I. 

 In 1988, Appellant Walter Kadelski, filed an 

application for disability insurance benefits under Title II of 

the Social Security Act, 42 U.S.C. § 401 et seq. After the 

Secretary of Health and Human Services (the Secretary) denied his 

request for benefits, Kadelski, pursuant to 42 U.S.C. § 405(g), 

sought judicial review by filing suit in the United States 

District Court for the Eastern District of Pennsylvania. In 

response to cross-motions for summary judgment, a magistrate 

judge concluded that the administrative law judge's (ALJ) 

decision was not supported by substantial evidence. Accordingly, 

the magistrate judge recommended that the case be remanded to the 

Secretary for further administrative proceedings. On March 2, 

1992, the district court issued an order adopting the magistrate 
3 

judge's Report and Recommendation as the decision of the court.1

 Upon remand, the Secretary found that Kadelski was 

entitled to disability insurance benefits. Subsequently, on 

January 11, 1993, Kadelski returned to the district court and 

filed his application for attorney's fees and costs under the 

EAJA. The court, finding that Kadelski had failed to apply for 

an EAJA Award "within 30 days of final judgment in the action", 

28 U.S.C. § 2412(d)(1)(B), denied the application as untimely. 

Kadelski's motion for reconsideration was also denied. On April 

5, 1993, the district court vacated its March 30, 1993 order 

pending the outcome of a similar case, Shalala v. Schaefer, 113 

 

1 The district court's remand order reads as follows: 

ORDER 

AND NOW, this 2nd day of March, 1992, upon 

careful consideration of the Report and 

Recommendation of United States Magistrate 

Judge Richard A. Powers, III in this action, 

and the Court concluding that [the] 

Magistrate Judge's . . . thorough analysis is 

completely persuasive, and in the absence of 

exceptions to the Report and Recommendation, 

it is hereby ORDERED that: 

1. The Report and Recommendation of February 

12, 1992 is Approved and the analysis therein 

is ADOPTED as that of the court; 

2. Plaintiff's motion for summary judgment 

is DENIED and defendant's motion for summary 

judgment is DENIED; 

3. This action shall be REMANDED to the 

Secretary for reconsideration by the 

Administrative Law Judge consistent with 

the opinion of Magistrate Judge Powers and 

with the aid of a medical advisor in 

conformity with Social Security Rule 83-

20. 
4 

S. Ct. 2625 (1993). After Schaefer was decided, the district 

court once again denied Kadelski's application. Kadelski's 

subsequent motion to vacate that order was denied. Kadelski 

appealed. 

II. 

 Although determinations of attorney fee awards under 

the EAJA are generally reviewed under an abuse of discretion 

standard, Pierce v. Underwood, 487 U.S. 552, 562 (1988), 

questions of law, such as the proper interpretation of the EAJA 

and Supreme Court precedent, are subject to plenary review. 

Dewalt v. Sullivan, 963 F.2d 27, 29 (3d Cir. 1992). 

 The EAJA provides that the district 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 . . . 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). As a prerequisite to an award of 

fees, a claimant must file an application for fees "within thirty 

days of final judgment in the action." Id. at § 2412(d)(1)(B). 

The statute defines "final judgment" as "a judgment that is final 

and not appealable." Id. at § 2412(d)(2)(G). 

 In reviewing final agency decisions regarding 

disability insurance benefits, a district court may remand to the 

Secretary for reconsideration. 42 U.S.C. § 405(g) (Supp. 1994). 

In Melkonyan v. Sullivan, 111 S. Ct. 2157 (1991), the Supreme 

Court explained that the two kinds of remand permitted by the 

statute are the exclusive methods by which a district court may 

remand a case to the Secretary. Sentence four of § 405(g) 
5 

provides "[t]he [district] court shall have power to enter, upon 

the pleadings and transcript of the record, a judgment affirming, 

modifying, or reversing the decision of the Secretary, with or 

without remanding the cause for a rehearing." 42 U.S.C. §405(g). 

The sixth sentence of 42 U.S.C. § 405(g) provides: 

The court may, on motion of the Secretary 

made for good cause shown before he files his 

answer, remand the case to the Secretary for 

further action by the Secretary, and it may 

at any time order additional evidence to be 

taken before the Secretary, but only upon a 

showing that there is new evidence which is 

material and that there is good cause for the 

failure to incorporate such evidence into the 

record in a prior proceeding; and the 

Secretary shall, after the case is remanded, 

and after hearing such additional evidence if 

so ordered, modify or affirm his findings of 

fact or his decision, or both, and shall file 

with the court any such additional and 

modified findings of fact and decision, and a 

transcript of the additional record and 

testimony upon which his action in modifying 

or affirming was based. 

Id. 

 In Schaefer, the Supreme Court reaffirmed its previous 

holdings that a remand order pursuant to sentence four of 

§405(g), as opposed to sentence six, constitutes a judgment, 

which squarely falls within the term "final judgment" as used in 

the EAJA, when it no longer can be appealed. Schaefer, 113 S.Ct. 

at 2629 (citations omitted).2 Thus, at the outset we must 

ascertain the nature of the remand order to determine if the 

 

2 We note parenthetically that the Court's holding in Schaefer

that a district court cannot retain jurisdiction upon remanding a 

case pursuant to sentence four, Schaefer, 113 S.Ct. at 2629-30, 

and its holding that a claimant who obtains judgment under 

sentence four is deemed a prevailing party for purposes of the 

EAJA, id. at 2631, overrules our holdings to the contrary in 

Persichetti v. Secretary, Health and Human Services, 990 F.2d 80 

(3d Cir. 1993). 
6 

district court entered final judgment in the case. A district 

court may order a sentence-six remand in only two situations: 

where the Secretary requests a remand before answering the 

complaint, or where new, material evidence is adduced that was 

for good cause not presented before the agency. See §405(g) 

(sentence six); Schaefer, 113 S.Ct. at 2629 n.2. As the district 

court's remand order does not fit within either situation, it was 

unquestionably entered pursuant to sentence four. 

 Having determined that the district court's remand 

order was a fourth-sentence remand, we now proceed to determine 

if Kadelski's fee application was timely filed. As noted above, 

the Court in Schaefer reiterated that a fourth-sentence remand 

order constitutes a "final judgment," when it no longer is 

subject to appeal. Id. at 2929. Rule 4(a) of the Federal Rules 

of Appellate Procedure establishes that the time for appeal from 

a civil case in which an officer of the United States is a party 

is sixty days after entry of judgment in the district court. A 

prevailing party must then file an application for attorney's 

fees within thirty days after the time for appeal has expired. 

See §§ 2412(d)(1)(B), (d)(2)(G); Schaefer, 113 S.Ct. at 2632. 

 Kadelski filed his application more than 90 days after 

the remand order which constituted the judgment in the case. 

Thus, at first blush, his application does not seem to satisfy 

the requirements of the EAJA. Nevertheless, Kadelski's claim is 

not time barred because the district court did not enter a 

separate document as required by Federal Rule of Civil Procedure 

58. Schaefer, 113 S.Ct. at 2632. The Rule not only requires 
7 

that every judgment be formally set forth "on a separate 

document," but that "[a] judgment is effective only when so set 

forth and when entered as provided in Rule 79(a)." Fed. R. Civ. 

P. 58. The entry of such a separate document unequivocally fixes 

the effectiveness of the judgment and avoids problems such as 

have arisen in this case and those cited in the following 

paragraph. See Schaefer, 113 S.Ct. at 2632 (citing United States 

v. Indrelunas, 411 U.S. 216, 220 (1973) (per curiam)). 

 Because the March 2 remand order was a judgment, see

Schaefer 113 S.Ct. at 2632, a separate document of judgment 

should have been entered. Here, as in Schaefer, the district 

court entered the remand order but did not enter a separate Rule 

58 judgment. Thus, absent a formal judgment, the district 

court's remand order remained appealable at the time Kadelski 

filed his application for EAJA fees, and therefore his 

application was timely under § 2412(d). Schaefer, 113 S.Ct. at 

2632; see also Newsome v. Shalala, 8 F.3d 775 (11th Cir. 1993); 

Curtis v. Shalala, 12 F.3d 97, (7th Cir. 1993); Gray v. Secretary 

of Health and Human Services, 3 F.3d 1584 (9th Cir. 1993); 

Freeman v. Shalala, 2 F.3d 552 (5th Cir. 1993). 

 The Secretary argues vigorously that, notwithstanding 

Schaefer, Rule 58 was complied with in the present case. The 

Secretary cites to a number of cases that hold that an order 

adopting a magistrate judge's Report and Recommendation satisfies 

Rule 58. See Mason v. Groose, 942 F.2d 515, 516 (8th Cir. 1991), 

cert. denied, 112 S.Ct. 891 (1992) (order adopting Magistrate's 

report and recommendation satisfies Rule 58); Laidley v. McClain, 
8 

914 F.2d 1386, 1390 (10th Cir. 1990) (same); Alman v. Taunton 

Sportswear Mfg. Corp., 857 F.2d 840, 843 (1st Cir. 1988) (same), 

cert. denied, 109 S.Ct. 1173 (1989); United States v. Perez, 736 

F.2d 236, 238 (5th Cir. 1984) (same). These cases, however, were 

all decided prior to the Supreme Court's decision in Schaefer, 

which involved a remand order precisely similar to this case 

adopting the Report and Recommendation of a magistrate judge,3

and in which the Court held that order does not satisfy Rule 58 

unless a separate document of judgment is entered. Thus, they 

are no longer controlling in light of Schaefer. 

 Moreover, contrary to the Secretary's contention, the 

clerk of court's notation on the docket that the case was closed 

is not determinative. The clerk did not mark the case closed 

pursuant to an order entered by the court; rather, the clerk 

followed an internal office procedure that whenever a case is 

remanded, the clerk marks the case closed on the docket sheet. 

The same case closed notation also appeared on the docket sheet 

in Schaefer and the court did not find the notation instructive. 

III. 

 Accordingly, we hold that a judgment of a district 

court remanding a case to an administrative agency remains 

appealable unless a separate document formally setting forth the 

judgment is entered in accordance with Federal Rule of Civil 

Procedure 58. Therefore, the judgment of the district court 

denying Kadelski's motion for attorney's fees will be vacated and 

 

3See Newsome, 8 F.3d 779 n.19 (quoting Sullivan v. Schaefer

Petition for Writ of Certiorari, Appendix E). 
9 

the case remanded to the district court to enter judgment in 

accordance with Rule 58 and for such other proceedings as are 

consistent with the opinion, including consideration whether the 

Government's position was substantially justified as provided by 

the EAJA. 

 Costs taxed against the appellee.