## United States Court of Appeals for the Federal Circuit

2006-7053

ALICE DAVIS (as surviving spouse of Phillip Davis, deceased), Claimant-Appellant,

v.
R. JAMES NICHOLSON, Secretary of Veterans Affairs, Respondent-Appellee.

Sandra E. Booth , of Columbus, Ohio, argued for claimant- appellant. Marla T. Conneely , Trial Attorney, Commercial Liti gation Branch, Civil Division, United States Department of Ju stice, of Washingt on, DC, argued for re spondent-appellee. With her on the brief were Peter D. Keisler , Assistant Attorney General; David M. Cohen , Director; and Donald E. Kinner , Assistant Director. Of counsel on the brief was Michael J. Timinski , Deputy Assistant General Counsel, Un ited States Department of Veterans Affairs, of Washington, DC. Of counsel was Martin J. Sendek , Attorney, United States Department of Veterans Affa irs, of Washington, DC. Appealed from: United States Cour t of Appeals for Veterans Claims Judge Bruce E. Kasold

## United States Court of Appeals for the Federal Circuit

2006-7053

ALICE DAVIS (as surviving spouse of Phillip Davis, deceased), Claimant-Appellant,

v. R. JAMES NICHOLSON, Secretar y of Veterans Affairs, Respondent-Appellee.

_______________ ___________ DECIDED: February 5, 2007

__________________________ Before MICHEL, Chief Judge , RADER and LINN, Circuit Judges

. MICHEL, Chief Judge

. Phillip Davis appeals from the judgment of the United Stat es Court of Appeals for Veterans Claims (“Veterans Court”) denying hi s application for attorney’s fees pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d). Davis v. Nicholson , No. 01-0122(E), 2005 U.S. App. Vet. Claims LEXIS 947 (V et. App. Nov. 1, 2005) (“EAJA Decision”). For the reasons discussed below, we affirm. I. BACKGROUND Davis, a World War II veteran, filed a claim for Total Disability based upon Individual Unemployabi lity (“TDIU”) with the Regional Office (“RO”) on December 2, 1992. The RO d enied this claim, and Davis ap pealed this denial to the Board of Veterans’ Appeals (“Boar d”). After a remand to the RO in 1998 for additionaldevelopment, the Board denied Dav i s’ TDIU claim on October 13, 2000, f i nding that Davis ’ service-connected disabilities did no t preclude him from gainful employment under 38 C.F.R. § 4.16(a). 1 Davis thereafter appealed the Board’s decis ion to the Veterans Court, arguing as one error the B oard’s failure to follo w 38 C. F.R. § 4.15, which requires, inter al ia , that full consideration be give n to “unusual physical or mental effects in individual c a ses, to peculiar effe cts of occupational activities, to defects in physical or mental endowment preventing t he usual amount of success in overcomin g the hand ic ap of d i sab ility a nd to the effect of combinations of d i sa bility.” Dav i s argued that instead of considering § 4.15, the Board limited its TDIU determination to 38 C.F.R. § 4.16. The Veterans Court disagreed and, in a 2002 decis ion affirming the Board’s denial of Davis’ T D IU claim, conc luded that § 4.15 was not before the Veterans Cour t on appeal. Davis v. Principi , 2 No. 01-0122 ( V et. App. Aug. 27, 2002). Davis appealed the Veterans Court decision to t h is court. Holding that the “Veter ans Court erred when it suggested that the individual iz ation requirements of section 4.15 we re independent of the TDIU c r iteria set forth in section 4.16 and refused to consider section 4.15 as an issue not before the court,” we vacated the decision and remanded on February 3, 2004. Davis v. Principi , 88 Fed. App’x 397, 400 (Fed. Cir. 2004)

1 Pursuant to 38 C.F.R. § 4.16(a), the veteran must meet percentage ratings requirements and must show that service-connect ed dis abilities pr event the veteran from securing substantially gainful employme nt. There was no dispute that Davis met the percentage r equirements of § 4.16(a). 2 The Secretary of Veterans A ffairs during the pendency of Davis ’ underlying benefits case was Anthony J. Princi pi. R. James Nicholson is the current Secretary of Veterans Affairs.

2006-7053 2(nonprecedential). We expre ssed no opinion on whether the Board had in fact considered the particular circumstances of Davis’ dis abilities under § 4.15. Id.
At the Veterans Court, Davis filed a motion for remand to the Board for readjudication of his claim on the ground that t he Board had failed to apply or discuss § 4.15. O n April 20, 2004, the Veterans Court denied Davis’ motion for remand but vacated the Board’s October 13, 2000 dec isi on and remanded the case to t h e Board f o r fact finding. Davis v. Principi , No. 01-0122 (Vet. App. Apr. 20, 2004) (“Remand Order”). The pertinent part of t he Remand Order states Because the application of § 4.15 requires a determination of fact, the matter must be r e manded t o t he Boar d for further action. See 38 U.S.C. § 7261(c); Hensley v. West , 212 F.3d 1255, 1263 (Fed. Cir. 2000). On remand the appellant is free to submit additional ev idence and argument necessary to the re solution of his claim. See Kutscher ousky v. West , 12 V e t.App. [sic] 369 (1999) (per curiam order).

Upon cons ideration of the foregoing, it is Ordered that appellant’s unopposed motion to expedit e is granted. Appellant’s motion for remand is denied. The Secretary’s motion to strik e appellant’s motion for remand and moti on for a stay of proceedings are denied as moot. Remand Order at 2. The Veter ans Court did not retain jurisdic tion over the remand. Davis eventually received TDIU benefits in 2004. On the basis of the Remand Order, Davi s filed at the Veterans Court an application seeking $27, 903.29 in attorney’s fees and ex penses under the Equal Acc e s s to Justice Act, which provides in relevant part: Exc ept as otherwise s pecific ally provided by statute, a court shall award to a prevailing party other than the United States fees and ot her expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil ac tion (other than cases sounding in tort), including proceedings for judicial review of agen cy action, brought by or against the United States in any court hav ing jurisdict i on of that action, unless the

2006-7053 3court finds that the positi on of the United St ates wa s s ubstantially justified or that special circumstanc es make an award unjust. 28 U.S.C. § 2412(d)(1)(A). On November 1, 2005, the Ve terans Court denied the EAJ A application on the gr ound that Davis was not a “prevaili ng party” under the EAJA because there had been no finding of administrative error by this court or the Veterans Court in the underlying benefits case. EAJA De cis i on at *4. “R ather, the [Veterans] Court remanded the matter for a determination of f a ct.” Id. at *3-4. This appeal followed. Davis died shortly after filing th e instant appeal. On October 17, 2006, this court granted an unopposed motion to substitute Davis’ surviving widow Alic e Dav i s as the appellant. We have jurisdicti on pursuant to 38 U.S.C. § 7292.

II. DISCUSSI ON The question of whether Davis is a “p revailing party” under the EAJA is a question of law that we review de novo. Vaughn v

. Principi , 336 F.3d 1351, 1354 (Fed. Cir. 2003) (internal citati on omitted). The EAJA is a fee- shifti ng statute that allows a party who prevails in a civ i l ac tion brought by or against the go vernment to recover attorney’s fees and costs. 28 U. S.C. § 2412(d)(1)(A). A party prevails in a civil action if he receives “‘at least some relief on the me rits of his claim.’” Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’ t of Health & Human Res. , 532 U.S. 598, 603-604 (200 1) (quoting Hewitt v. Helms , 482 U.S. 755, 760 ( 1987) ). In Buckhannon , the Supreme Court provides a s pec trum for distinguishing prevai ling parties from parties not entitled
to an awar d of attorney’s fees, albeit in the Fair Housing Amendments Act context. Id. at 604. At one end of the spectrum, enfor ceable judgments on the merits, even for nominal damages, and court-order ed cons ent decrees confer prevailing party status. Id. They do so because they effect a “‘material alteration of the legal relationship of the

2006-7053 4parties’ necessary to permit an awar d of attorney’s fees.” Id. (quoting T e xas State Teachers Ass’n v. Garland Indep. Sch. Dist. , 489 U.S. 782, 792-93, (1989)). At the other end of the spectrum, interl ocutory rulings that reverse dis m issals for a failure to state a claim, reversals of directed verdic ts f o r defendants, and ac hievement of desired results because a lawsuit brought about a vo luntary change in the defendant' s conduct (i.e., the catalyst theor y) do no confer prevailing party status. Id. a t 605. We have applied th e definitio n of “prevailing p a rty” in Buckh annon to EAJA cases. Brickwood Contrs ., Inc. v. United St ates , 288 F.3d 1371, 1379 (Fed. Cir. 2002). Because remands do not nec e ssarily prov ide any relief on the merits, we hav e developed tests based on Su preme Court cases for det ermining when court-toadministrative agency remands confer prevailing party status. See Former Employees of Motorola Ceramic Prods. v. United States , 336 F.3d 1 360, 1366 (Fed. Cir. 2003). For example, we held that where the plaintiff secures a rem and requiring further agency proceedings because of alleged error by the agenc y , the plaintiff qualifies as a prevailing party (1) without regard to the outcome of the agency proceedings where there has been no retent ion of jurisdiction by the court, or (2) when successful in the rem and proceedings wher e there has been a retention of jurisdiction. Id. In cases such as the instant appeal where the court below has not retained jurisdiction, we have developed an approach for determining when a remand to an administrative agency occurs “because of alleged error by the agency.” Id. On the one hand, remands for the considerat ion of new evidenc e discover ed for the first time during appeal, Vaughn v. Principi , 336 F.3d 1351, 1354, 1360 (Fed. Cir. 2003), and remands to consider the effects of interveni n g new la w, Akers v. Nicho lson , 409 F.3d 1356, 1360

2006-7053 5(Fed. Cir. 2005); Vaughn , 336 F.3d at 1353, 1360, 3 do not qualify plaintiffs as prevailing parties. On the other hand, remands bas ed on our recognition of agency er ror from the record do confer prevailing party status. K e lly v. Nic h o lson , 463 F.3d 1349, 1354 n. 3 (Fed. Cir. 2006). The same result follows if the Veterans Court finds administrative error or if the Secretary concedes it. Here, the parties agree that the remand at issue is the remand by the Veterans Court to the Board in the underly ing merits ca se. In the Remand Order, the Veterans Court did not retain j u risdicti on but did order further action by the Board. Therefore, under Motorola , we are not concerned about the ul timate outcome of the agency proceedings on the underlying m e rits case. 336 F.3d at 1366. Instead, our focus is on whether agency error was the reason for the Davis remand. Davis argues that the agency error on whic h the Rem and Order was bas e d wa s the Board’s failure to f o llow § 4.15 in its TDI U analysis. In order for Davis to prevail on this argument, we must conclude that the Remand Order was either explic itly or implic itly predicated on administrative error. The critical language in the Remand Order states: Because the application of § 4.15 requi res a determination of fact, the matter must be remanded to the Board for further action. See 38 U.S.C. § 7261(c); Hensley v. West , 212 F.3d 1255, 1263 (Fed. Cir. 2000). On remand the appellant is free to subm it additional evid ence an d argument necessary to the resolution of his claim. See Kutscherousky v. West , 12 Vet.App. [sic] 369 (1999) (per curiam order).

3 In Vaughn , Ms. Vaughn and Mr. Sumner s epar ately appealed to this court the Veterans Court’s denial of an EAJA app lication. 336 F.3d at 1354, 1360. In the underlining merits case for both Ms. Vau ghn and Mr. Sumner, the Veterans Court remanded the case to the Board. The re mand for Ms. Vaughn was based on a change in law. The remand for Mr. Sumner was based on newly acquired material evidenc e

. Because both cases concerned the same legal i ssue, i.e., whether t hey were prevailing parties under EAJA, we addr essed both appeals in Vau ghn

.
2006-7053 6Remand O r der at 2. The Remand Order, albe it somewhat opaque, does not state that the remand is predic ated on agency error. The Remand Order does not state that the Board had failed to apply or had improperly app lied § 4.15 in the underlying merit s decision. Instead, the Remand Order merely permits fact-fi nding in view of § 4.15 and allows the parties to submit addi tional evidence on the issue. Davis may believe that the Rem and Order must have been based on the agency’s e rror in failing to address § 4.15, but this inference wou l d only be co mpelling if agency errors were the only reas on the Vet e r ans Cour t could iss ue remands. Instead, the Veterans Court has authority to remand cases to the Board for further proceedings for further consideration of legal issues or for clarification of facts underly i ng a legal issue. Williams v. Prinicip i , 275 F.3d 1361, 1365 (Fed. Cir. 2002); see also 38 U.S.C. § 7252(a) (stating that the “[Ve terans] Court shall have po wer to affirm, modify, or reverse a decision of the Board or to remand the matter, as appropriate.”). Tellingly, Davis filed at the Vete rans Court a motion for remand seeking readjudication of his c l aim on the ground that the Bo ard had erred in failing to apply or discuss § 4.15. Davis further argued that the Board’s failu re to follow § 4.15 was a violation of 38 U.S.C. § 7104( a), which requires Board decisions to be based on, inter alia , the entire record and on consideration of all “applicable provisions of law and regulation.” 38 U.S.C. § 7104(a). The fact that t he Veterans Court denied Dav i s ’ remand motion in the Remand Order strongl y suggests that the court rejected these arguments and that the Dav i s remand was not necess a rily for agency corrective action to remedy an error by the Board.

2006-7053 7Davis re lie s on K e lly for the proposition that the determination of agency error is not limited to the four cor ners of the Remand Order. We agree, but even under this analys is, we cannot readily conc lude that the Davis remand was based on agency error.
In Kelly , m edical records before the RO and B oard supported two di agnoses (i.e., olivopontoc erebellar atrophy (“OPC A”) and ataxia) as the bases of Kelly’s single c l aim for service connection based on his expos ur e to Agent Orange. 463 F.3d at 1353. The RO only c onsidered the OPCA diagnosis in its denial of Kelly ’s service connection claim. Id. Kelly appealed th is denial to the Board and t hen to the Veterans Court. Id. at 1351. Through a convoluted pr ocedural history that we will not rehearse here, the Veterans Court remanded the case for the Board to address the ataxia iss u e for the first time. Id. at 1351-52. Based on the ataxia remand order, Kelly filed an EAJ A application for attorney’s fees. Id. at 1352. The Veter ans Court, howev er, denied Kelly ’s application after determining that the ataxia remand or der was not based on agency error. Id. at 1353-54. On appeal, we reversed, citing as agency error the Department of Veterans Affairs’ failure to consider “all evidence an d material of record” before deciding Kelly ’ s service connection c l aim, in contravention of 38 U.S.C. § 5107( b), because it had ignored evidence of Kelly ’s ataxia diagnos is . Id. at 1354-55. Kelly is distinguishab le from Davis . In Kelly , the agency error, although not explic itly st ated in the atax ia remand order, was nev erthel ess c l ear from the record, namely that the Depar tment of Veterans Affa irs (“VA”) had ignored evidence before it of Kelly ’s ataxia disorder in the service c onnection analysis

. The Board opinion made this clear. Her e , the recor d is less clear.

2006-7053 8When the underlying merits case was bef ore us on appeal, we held only that § 4.15 was applicable to TDIU determinations. We e x pre ssed no opinion on whether the Board had actually applie d § 4.15. Similarly, on re mand, the Veterans Court expressed no opinion on whether the Board had applied § 4.15 to Dav i s’ TDI U claim. Additionally , there is no conc es sion of agency error by the VA. In fact, the parties disputed whether the Boar d had applied § 4.15 to Davis’ TDIU claim in its original merits decision. This is a c l assic failur e of proof case. Dav i s’ sole argument is that the Board failed to follow § 4.15 because it did not ci te § 4.15 in its October 13, 2000 opinion. Howev e r, in its October 13, 2000 decision, t he Board stated that it had considered al l potentially applicable provisions of 38 C.F. R. Parts 3 and 4, which inclu d es § 4.15. Moreover, the Board found that Davis was not unemployable as a result of his serviceconnected facial scars in combination with his other ser v ice-connected disabilities. That the Board considered the facial scars in combination with Davis’ other disabilities suggests that it had applied § 4.15, because § 4.15, not § 4.16, requires that full consideration be given to, inter alia , “the effect of combinations of disability.” 38 C.F.R. § 4.15. The Board’s consider ation of the applic able p r ovis ions of 38 C.F.R. Part 4 and the effect of the combinations of Davis’ disabilities c oupled wit h the Veterans Court’s rejection in the Remand Order of Davis’ argu ment that the Board had failed to follow or apply § 4.15 strongly suggest that the Re mand Order was not predicated on administrative error. As such, Davis has not carried his burden of proof to show administrative error.

2006-7053 9Unlike the ataxia rem and order and ev identiary record in Kelly , nothing in the Davis Rem and Order or the evidentiary record clearly indic a tes that Davis’ remand was based on agency error. Because there is no judic i al finding of agenc y error or concession of agency error and becaus e the reco rd is not clear, we hold that Davis failed to prove that the remand was based on administrative agency error and that in view of M o torola , Davis is not a prevailing party for EAJA purposes. The remand merely afforded Davis an opportunity to liti gate again and in no way materially altered his legal relationship with the VA as to the cl aimed TDIU benefits. The EAJA applicant has the bur den of proving he is a prev ailing party. Ramcor Servs. Group, Inc. v. United St ates , 185 F.3d 1286, 1288 (Fed. Cir. 1999) (“Once a prevailing party satisfies the EAJA requir ements . . . the burden shifts to the Government to show that its liti gating posit ion was ‘s ubstantially ju stified.’”). Where there has been a remand to an administrative agency without a judicial finding of administrative error or a concess i on of such e rror by the agency, t he def ault rule is that the remand is not bas ed on administrative error for EAJA purposes under the Motorola test. This default rule places the burden on the EAJA applicant to prove, based on the record, that the remand had to have been predicat ed on administrative error even though the remand order does not say so. We were initially concerned by the fact that the Dav i s Remand Order denied Davis ’ motion but still granted Da vis the remand relief he sought. The Remand Order suggests that the Veterans Cour t may have gr anted relief for reasons different from the ones Dav i s articulated in his motion for rem and. At oral argument, counsel for both parties reduced our puzzlement when they informed us that while the underlying merits

2006-7053 10case was on appeal before us, Davis filed a second TDIU claim based on new evidenc e . This proffer of new ev idence s u ggests that the facts of Da vis are c o mparable to those of Mr. Sumner in Vaughn

. Mr. Sumner appealed the Board’s denial of his benefits to the Veterans Co urt. Vaughn , 336 F.3d at 1354. During the pendency of his appeal, Mr. Sumner filed a motion with the Board for reconsideration of his benefits clai m in light of newly acqu ired material evidence and filed with the Veterans Cour t a motion to stay his appeal. Id. The Veterans Court granted t he stay. Id. The Board granted the motion f o r reconsider ation, stayed its order pending rem and from the Veterans Court, and filed with the Veterans Court an unopposed moti on for remand pursuant to Cerullo v. Derwinsk i , 1 Vet. App. 195, 200 (Vet. App. 1991). Id. After the Veterans Court granted a Cerullo remand, Mr. Sumner filed an EAJA application for attorney’s fees. Id. The Veterans Court denied the applic ation, and we affirmed because, inter alia , the remand was based on the discov e ry of new evidence and was for “further proceedings without a determination of [ agency] er ror.” Id. at 1354, 1360. Here, Mr. Davis, like Mr. Sumner, sought to readjudicate his claim by offering new evidence, except here the readjudication was in a separate TDIU case. Counse l for the VA informed us that Judge Ivers was privy to this information when he wrote the Davis Remand Order. This dev elopment partially explai ns why the Remand Order provides that on remand Davis was free to submit additional evidence and argument necessary to the resolution of his c l aim. Moreover, counsel’s statements at oral argument are further i ndic i a that the Davis remand was not necessarily based on

2006-7053 11administrative error. Although we do not bas e our ruling on facts we learned for the first time at oral argument, we find that counse l’s statements confirm our reading of th e Remand Order and the record.

We have c onsidered Davis ’ other argument s and conc lude that they are eit h er unpersuasive or their review is unnecessary for the disposition of this appeal. III. CONCLUS ION Because t he Veterans Court did not e rr in denying Davis’ EAJA application for attorney’s fees given t hat the remand to the administrative agency was not because of agency error, the deci s ion of the Court of Appeals for Veterans Claims is
AFFIRMED

.

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