UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

No. 17-3296(E)

SHAWN P. LACEY, APPELLANT,

V.

ROBERT L. WILKIE,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appellant's Application for Attorney Fees and Expenses

(Decided August 18, 2020)

Jennifer A. Zajac, of Oceanside, California, was on the pleading for the appellant.

William A. Hudson, Jr., Acting General Counsel; Mary Ann Flynn, Chief Counsel; Edward 

V. Cassidy, Jr., Deputy Chief Counsel; Megan C. Kral, Deputy Chief Counsel, all of Washington, 

D.C., were on the pleading for the appellee.

Before ALLEN and TOTH, Judges, and SCHOELEN,

1

Senior Judge.

SCHOELEN, Senior Judge, delivered the opinion of the Court. ALLEN, Judge, filed a 

concurring opinion. TOTH, Judge, filed a dissenting opinion.

SCHOELEN, Senior Judge: Before the Court is the application of the appellant, Shawn P. 

Lacey, for an award of legal fees and expenses under the Equal Access to Justice Act (EAJA), 

28 U.S.C. § 2412(d), in the amount of $35,666.33, for the work of his lawyer, Jennifer A. Zajac, 

Esq., and her co-counsel, Linda E. Blauhut, Esq. See Appellant's Application for an Award of 

Attorney Fees, Costs and Other Expenses Under the Equal Access to Justice Act (Appl.) at 1-11. 

The Secretary filed an opposition to that application. See Secretary's Response to Appellant's 

Application for Attorney Fees and Expenses (Secretary's Resp.) at 1-11. The Court grants

entitlement to attorney fees, costs, and expenses for the entire period requested and orders a staff 

conference to be held under Rule 33 of the Court's Rules of Practice and Procedure to discuss the 

reasonableness of the amount of requested fees and expenses.

 

1

Judge Schoelen is a Senior Judge acting in recall status. In re Recall of Retired Judge, U.S. VET. APP. MISC.

ORDER 04-20 (Jan. 2, 2020).
2

I. BACKGROUND

The Veterans Retraining Assistance Program (VRAP) was a short-lived program intended 

to provide older veterans with job retraining for various high-demand occupations. VA denied 

Army veteran Shawn P. Lacey's application for VRAP benefits because he sought to use them to 

pursue a bachelor's degree at Medaille College, a 4-year college, rather than an associate's degree 

(or a certificate attesting to a degree of similar nature) at a community college or technical school. 

In construing the VRAP statute, the Board invoked the negative implication canon of statutory 

interpretation in reasoning that Congress, by mentioning community colleges and technical 

schools, sought intentionally to exclude from the program 4-year institutions such as colleges and 

universities. Record (R.) at 9-10.

Mr. Lacey appealed to this Court, arguing that the VRAP statute Congress passed only 

required a veteran to take a course or courses that are offered by a community college or technical

school and did not require the veteran to take such courses at a community college or technical 

school. The Court held that the VRAP statute

is at least ambiguous in this regard, as it provides no clear answer to whether 

benefits can be used at four-year colleges or are limited only to community colleges 

or technical schools. Further, because VA never issued any regulations or guidance 

interpreting the statute, there is no agency position that warrants deference. In the 

absence of any considered agency position, and having exhausted the traditional 

tools of statutory construction, the Court concludes that the pro-veteran canon 

requires us to read the statute as including four year colleges and institutions when 

the course at issue is offered by a community college or technical school and did 

not require the veteran to take such course at a community college or technical 

school.

Lacey v. Wilkie, 32 Vet.App. 71, 73-74 (2019). Of significance in determining Mr. Lacey's 

entitlement to legal fees and expenses under EAJA, the Court rejected the reasoning of the Board

at the administrative level, concluding that the Board's "invo[cation of] the non-implication canon 

as decisive in its reading of the [VRAP] statute . . . . carries little probative weight in determining 

a statutory meaning, because Mr. Lacey's program of education appears to fall within the definition 

provided by Congress" of a "program of education." Id. at 78 (citation omitted). The Court 

explained that the Board's analysis "overlooks the salient fact that Congress expressly defined 

'program of education' . . . [to] contain[] an expansive list of the types of courses at an 'educational 

institution' . . . [and] defined 'educational institution' to expressly include 4-year colleges and 
3

universities." Id. The Court also found that "the Board's citation to regulations from VA and other 

federal agencies for guidance . . . is misplaced where Congress provided its own definition[s]" by 

reference of "program of education" and "educational institution." Id.

II. ANALYSIS

This Court has jurisdiction to award attorney fees under 28 U.S.C. § 2412(d)(2)(F). The 

appellant's EAJA application was filed within the 30-day EAJA application period set forth in 

28 U.S.C. § 2412(d)(1)(B), and the application meets the statutory content requirements because 

it contains (1) a showing that the appellant is a prevailing party; (2) a showing that he is a party 

eligible for an award because his net worth does not exceed $2,000,000; (3) an allegation that the 

Secretary's position was not substantially justified; and (4) an itemized statement of the attorney 

fees and expenses sought. See 28 U.S.C. § 2412(d)(1)(A), (1)(B), (2)(B); Scarborough v. Principi, 

541 U.S. 401, 408 (2004).

The Secretary argues that the appellant's EAJA application should be denied because the 

Secretary's position was substantially justified. Secretary's Resp. at 4-10. Alternatively, he 

contends that the Court should exercise its authority and discretion to reduce the fees requested 

because the number of hours billed is unreasonable. Id. at 10-15. 

A. Substantial Justification

This Court will award attorney fees to a prevailing party "unless the Court finds that the 

position of the United States was substantially justified" or that the other statutory requirements 

were not met. 28 U.S.C. § 2412(d)(1)(A); Cycholl v. Principi, 15 Vet.App. 355, 359 (2001). 

Because in the instant case the appellant has alleged, pursuant to section 2412(d)(1)(B), that the 

Secretary's position was not substantially justified, the Secretary "has the burden of proving that 

his position was substantially justified . . . to defeat the appellant's EAJA application." Vaughn v. 

Gober, 14 Vet.App. 92, 95 (2000) (citing Stillwell v. Brown, 6 Vet.App. 291, 301 (1994)). The 

Secretary must establish that his position was substantially justified at both the Board level and 

before this Court. Id.; see Locher v. Brown, 9 Vet.App. 535, 537 (1996); ZP v. Brown, 8 Vet.App. 

303, 304 (1995).

"[A] position can be justified even though it is not correct," and "it can be substantially 

(i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a 

reasonable basis in law and fact." Stillwell, 6 Vet.App. at 302 (quoting Pierce v. Underwood, 
4

487 U.S. 552, 566 n.2 (1988)). In determining substantial justification, the Court's inquiry must 

focus on the "totality of the circumstances" pertinent to the Government's position on the issue on 

which the claimant prevailed, including the "state of the law at the time the position was taken."

Smith v. Principi, 343 F.3d 1358, 1363 (Fed. Cir. 2003). In doing so, the Court should look at 

factors including the "merits, conduct, reasons given, and consistency with judicial precedent and 

VA policy with respect to such position, and action or failure to act," along with any other 

applicable circumstances. Stillwell, 6 Vet.App. at 302; see Cline v. Shinseki, 26 Vet.App. 325, 327 

(2013). However, no one factor is dispositive. Patrick v. Shinseki, 668 F.3d 1325, 1332 (Fed. Cir. 

2011).

The Secretary avers that, at the time of the Board's decision, the issue in the underlying 

case – whether a 4-year college met the requirements of VRAP – was one of first impression that 

had not yet been addressed by VA or this Court, and he argues that this factor weighs in favor of 

reasonableness of VA's position at the administrative level. Secretary's Resp. at 7. He further 

argues that the Board's interpretation of the VRAP statute was reasonable because it "appropriately 

employ[ed] the canons of statutory construction" and relied on "analogous regulations[] and 

Congressional intent." Id. at 8; see R. at 7-10. 

This Court has determined that the Government's position was substantially justified where 

that position was invalidated in a case of first impression. See Felton v. Brown, 7 Vet.App. 276,

283 (1994) (finding the Secretary's position substantially justified in a case of first impression 

"[g]iven the statutory silence on the particular matter and the lack of a conflict with adverse 

precedent"). However, in Felton, the Court emphasized that it was not adopting a "per se rule that 

a case of first impression will always render the Government's position substantially justified." Id.

at 281. Rather, the Government must still show that its interpretation was "reasonable, albeit 

incorrect." Patrick, 668 F.3d at 1330; see also Gordon v. Peake, 22 Vet.App. 265, 269 ("In cases 

of first impression the Court must determine whether the issue presented 'close' questions, and 

whether the Secretary sought an unreasonable interpretation or resolution of the matter.") (citing 

Felton, 7 Vet.App. at 282); Cline, 26 Vet.App. at 330 (stating that although it was a case of first 

impression, it did not present a "close" question on which the Secretary had a "reasonable" 

interpretation). When the Secretary's adopted interpretation is "wholly unsupported by either the 

plain language of the statute or its legislative history," Patrick, 668 F.3d at 1333, such 

interpretation "weighs heavily against a finding of substantial justification, and, while not 
5

dispositive, makes it difficult to establish substantial justification." Butts v. McDonald, 

28 Vet.App. 74, 83 (2016) (citing Patrick, 668 F.3d at 1331) (internal quotation marks omitted).

Although there was no clear precedent at the time of the Board's decision in this case, 

applying the totality of the circumstances test, the Secretary does not demonstrate that his position 

at the administrative level was reasonable. In the merits decision, the Court pointed out that VA

took no action "to issue official guidance as to the agency's position on issues raised by the [VRAP] 

statute," and that if there had been such guidance, "this case may very well have turned out 

differently." Lacey, 32 Vet.App. at 80; see Stillwell, 6 Vet.App. at 302 (stating that pertinent factors 

to consider under the "totality of the circumstances" test include "VA policy with respect to [the] 

position" at issue, and the agency's "action or failure to act"); see also Cline, 26 Vet.App. at 327. 

More significantly, the Court struck down the Board's interpretation of the VRAP statute, 

concluding the Board's use of "the negative implication canon carries little probative weight in 

determining a statutory meaning" because "Mr. Lacey's program of education appears to fall within 

the definition[s] provided by Congress." Lacey, 32 Vet.App. at 78. Similarly, regarding the 

"Board's citation to regulations from VA and other federal agencies for guidance as to various 

definitions," the Court held that such citations were "misplaced where Congress provided its own 

definition[s]." Id. Indeed, in Butts, upon which the Secretary relies as support for finding 

substantial justification in this case, the Board was following guidance that the Court itself had set 

out in existing precedent that was overturned subsequent to the Board decision, and even under 

those circumstances, the Court found that the Board's position was not substantially justified where 

other factors weighed more heavily toward a finding of unreasonableness. 28 Vet.App. at 82 

("[U]nder the totality-of-the-circumstances test, the Secretary's compliance with precedent does 

not relieve the Court of its duty to evaluate the reasonableness of the Secretary's regulatory 

interpretation and his conduct at the administrative level" in a case involving an issue of first 

impression); see also Patrick, 668 F.3d at 1332 ("[t]he fact that the Veterans Court had previously 

upheld the VA's erroneous interpretation of [a statute] does not . . . resolve the substantial 

justification inquiry."). 

In sum, the Court concludes that the totality of circumstances in this case shows that the 

Secretary has not satisfied his burden to show that the Board's interpretation of the statute was 

reasonable, as no "reasonable person could think it correct." See id. at 1330 (citing Pierce, 487 

U.S. at 566). Thus, the Secretary has not met his burden to show that his administrative position 
6

was substantially justified, Locher, 9 Vet.App. at 537, and, therefore, the Court need not address 

whether he was substantially justified at the litigation stage, see Cycholl, 15 Vet.App. at 361 

(holding that the Court need not address the Secretary's position at the litigation stage where the 

Secretary failed to carry his burden of demonstrating that his position was substantially justified 

at the administrative stage).

B. Reasonableness of Fees and Expenses

Typically, once the Court determines that an appellant has met the threshold requirement 

for receiving EAJA fees and expenses, the Court must determine the reasonableness of the fees 

and expenses. See Uttieri v. Brown, 7 Vet.App. 415, 418 (1995) (citing Comm'r, INS v. Jean, 

496 U.S. 154, 160-61 (1990)). The Court "has wide discretion in the award of attorney fees under 

the EAJA." Chesser v. West, 11 Vet.App. 497, 501 (1998) (citing Hensley v. Eckerhart, 461 U.S. 

424, 437 (1983)). Because the only remaining issue is the reasonableness of the fees to be awarded, 

the Court will order a staff conference to be held under Rule 33 of the Court's Rules of Practice 

and Procedure to discuss the reasonableness of the requested fees and expenses. See U.S. VET.

APP.R. 39(c) (permitting the Court to direct the parties in a fee dispute to attend a staff conference); 

U.S. VET. APP. INTERNAL OPERATING P. XII(a) ("If reasonableness of the requested fee is the only 

contested issue, [Central Legal Staff] conducts a conference with the parties to attempt to resolve 

the disagreement."). The Court will provide the parties 30 days following the staff conference to 

reach a settlement based on the Court's holding. If no agreement on fees and expenses is made 

within the allotted time, the Court will determine a reasonable amount of fees, costs, and expenses 

owed by the Government to the appellant. 

III. CONCLUSION

Upon consideration of the foregoing, it is

ORDERED that entitlement to attorney fees, costs, and expenses for the entire period 

requested is GRANTED. It is further

ORDERED that a Rule 33 staff conference be scheduled. It is further

ORDERED that within 30 days of the staff conference, the parties shall inform the Court 

of the status of their settlement efforts. And it is further

ORDERED that if an agreement is not reached, that the matter be returned to the panel at 

the expiration of the 30-day period following the staff conference absent further order of the Court.
7

Allen, Judge, concurring: I join the opinion of the Court in full. I write separately to 

underscore that in my view the plain language of the statute creating the VRAP dictated the result 

the Court reached in the underlying appeal. See Lacey v. Wilkie, 32 Vet.App. 71, 80-82 (2019) 

(Allen, J., concurring in the judgment). While there are no bright line rules for determining the 

substantial justification of the Government's litigation position – and I recognize the Court does 

not reach this issue in the majority opinion– both this Court and the Federal Circuit have 

recognized that it is difficult for the Government to carry its burden in this regard when the 

statutory language is clear. See Patrick v. Shinseki, 668 F.3d 1325, 1330-31 (Fed. Cir. 2011); Butts 

v. McDonald, 28 Vet.App. 74, 80 (2016) (en banc). As I explained in my concurring opinion in 

the merits portion of this appeal, the statutory language we had to consider was susceptible of only 

one meaning. In my view, this clarity of statutory language provides an independent basis to grant 

the EAJA application before us because it renders the Government's litigation position 

unreasonable. With this comment, I join Judge Schoelen's opinion for the Court without 

reservation.

TOTH, Judge, dissenting: "The government can establish that its position was substantially 

justified if it demonstrates that it adopted a reasonable, albeit incorrect, interpretation of a 

particular statute or regulation." Patrick v. Shinseki, 668 F.3d 1325, 1330 (Fed. Cir. 2011). This

rule should foreclose EAJA fees here, since our opinion on the merits made clear that the 

Secretary's position was based on a "reasonable" reading of the statute and stood on "solid footing." 

Lacey v. Wilkie, 32 Vet.App. 71, 78, 80 (2019); see also id. at 79 ("On this question, the statute

stands closer to equipoise between the respective positions of the parties."). Considering the 

totality of the circumstances simply reinforces this conclusion. The statutory question was one of 

first impression for any court; both the Board's and the Secretary's legal analyses were based on 

the statute's text and the congressional purpose; and VA did not take a position that was 

inconsistent with any regulation or other official interpretation previously adopted. The majority 

doesn't disagree. Instead, it contends that the Secretary acted unreasonably "at the administrative 

level." Ante at 5. Why? Because the Board undertook the same sort of analysis advanced by the 

Secretary before us—one we found ultimately erroneous, but indisputably reasonable. Simply put, 

the basis for such a substantial justification distinction in this case eludes me. For these reasons, I 

respectfully dissent.