Opinion ID: 168407
Heading Depth: 2
Heading Rank: 5

Heading: EAJA's Definition of Position of the United States.

Text: 38 As defined by EAJA, `position of the United States' means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based. 28 U.S.C. § 2412(d)(2)(D). The statute further provides that [w]hether or not the position of the United States was substantially justified shall be determined on the basis of the record (including the record with respect to the action or failure to act by the agency upon which the civil action is based) which is made in the civil action for which fees and other expenses are sought. Id. § 2412(d)(1)(B). 39 This dichotomy between the position of the United States in the underlying agency action, which means the position of the ALJ in social security proceedings, see Cunningham v. Barnhart, 440 F.3d 862, 863-64 (7th Cir.2006), and the position of the government in a subsequent civil action/appeal before a district court, is difficult to apply in this case. To begin with, as set forth above, the ALJ in this case made an unreasonable legal/factual ruling at step five, and the ALJ's error at step five was the basis for this court's reversal and remand to the district court for a sentence-four remand to the Commissioner. See Hackett, 395 F.3d at 1174-76. However, in plaintiff's merits appeal to the district court, the Commissioner articulated new legal arguments in defense of the ALJ's step-five reasoning which, while ultimately unsuccessful, were quite reasonable, and the district court subsequently relied on the latter arguments to deny plaintiff's EAJA application. See Aplt. App., Vol. 2 at 205-06. 40 In Commissioner, INS v. Jean, 496 U.S. 154, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990), the Supreme Court addressed the question of whether EAJA fees can be awarded to a prevailing plaintiff for time spent in the fee litigation itself (i.e., the proceedings that arise after the government opposes an EAJA application), regardless of whether the government's positions in the fee litigation were substantially justified. Id. at 156, 157, 110 S.Ct. 2316. After analyzing the controlling statutory language, the Court concluded that a second substantial justification finding is not required before EAJA fees may be awarded to a prevailing plaintiff for time spent in the fee litigation process. Id. at 162, 110 S.Ct. 2316. In reaching this holding, the Supreme Court emphasized that there can only be a single finding on the question of substantial justification in any given case that involves both underlying agency proceedings and a district court appeal. As the Court explained: 41 The fact that the position is again denominated in the singular, although it may encompass both the agency's prelitigation conduct and the Department of Justice's subsequent litigation positions, buttresses the conclusion that only one threshold determination for the entire civil action is to be made. 42 Id. at 159, 110 S.Ct. 2316. 43 As argued by the Commissioner in this case, see Aplee. Supp. Br. at 2-3, 5-6, this language suggests that the government may cure unreasonable agency conduct by taking a reasonable position in any subsequent civil litigation before a district court. 1 Moreover, there is other language in Jean that arguably supports this interpretation. See Jean, 496 U.S. at 160, 161, 110 S.Ct. 2316 (stating that [t]he single finding that the Government's position lacks substantial justification, like the determination that a claimant is a `prevailing party,' thus operates as a one-time threshold for fee eligibility, and that [a]ny given civil action can have numerous phases. While the parties' postures on individual matters may be more or less justified, the EAJA-like other fee-shifting statutes-favors treating a case as an inclusive whole, rather than as atomized line-items.). 44 As the Seventh Circuit has recognized, however, the one threshold determination language can also be relied on to support the argument that EAJA fees may be awarded in cases where the government's prelitigation conduct was not substantially justified even though its litigating position may have been substantially justified and vice versa. Marcus v. Shalala, 17 F.3d 1033, 1036 (7th Cir.1994) (citing Jean, 496 U.S. at 159, 110 S.Ct. 2316). In other words, the fact that the government's litigating position was substantially justified does not necessarily offset prelitigation conduct that was without a reasonable basis. Id. 45 In fact, as the Ninth Circuit has pointed out,  Jean quoted legislative history of EAJA suggesting that a subsequent litigation position cannot `cure' an underlying agency action that is not substantially justified. Thangaraja v. Gonzales, 428 F.3d 870, 875-76 n. 1 (9th Cir.2005); see Jean, 496 U.S. at 159 n. 7, 110 S.Ct. 2316 ([T]he [1985] amendment [to EAJA defining the phrase `position of the United States'] will make clear that the Congressional intent is to provide for attorney fees when an unjustifiable agency action forces litigation, and the agency then tries to avoid such liability by reasonable behavior during the litigation.) (quoting H.R.Rep. No. 98-992, pp. 9, 13 (1984)). Indeed, both the Second and the Third Circuits reached this conclusion even before Jean. See Smith ex. rel Smith v. Bowen, 867 F.2d 731, 734 (2d Cir.1989); Taylor v. Heckler, 835 F.2d 1037, 1040 (3d Cir.1988); see also Morgan v. Perry, 142 F.3d 670, 684 (3d Cir.1998) (stating that unless the government's pre-litigation and litigation positions have a reasonable basis in both law and fact, the government's position is not substantially justified). 46 Having carefully analyzed this important issue, we believe the Commissioner has misread Jean, and we hold that EAJA fees generally should be awarded where the government's underlying action was unreasonable even if the government advanced a reasonable litigation position. United States v. Marolf, 277 F.3d 1156, 1159 (9th Cir.2002). This is only the general rule, however, and, for purposes of this case, we do not need to state categorically that a reasonable litigation position by the government can never cure unreasonable agency action. Instead, we limit our holding to the specific circumstances of this case. 47