Court Opinion

ID: 6323
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:15:40+00
Date Added: 2024-06-11T13:30:39.150792
License: Public Domain

United States Court of Appeals,

                            Fifth Circuit.

                      Nos. 93-3096, 93-3139

                          Summary Calendars.

               Jerry MILTON, Plaintiff-Appellant,

                                  v.

   Donna E. SHALALA, Secretary, Department of Health and Human
Services, Defendant-Appellee.

               Hopsey READO, Plaintiff-Appellant,

                                  v.

   Donna E. SHALALA, Secretary, Department of Health and Human
Services, Defendant-Appellee.

                            April 5, 1994.

Appeals from the United States District Court for the Middle
District of Louisiana.

Before DAVIS, JONES, and DUHÉ, Circuit Judges.

     DUHÉ, Circuit Judge:

     Jerry Milton and Hopsey Reado appeal from the judgments of the

district court denying their petitions for attorneys' fees under

the Equal Access to Justice Act ("EAJA").      28 U.S.C.A. § 2412(d)

(West Supp.1993).   Agreeing with the magistrate judge and the

district court that Appellants are not prevailing parties for

purposes of EAJA, we affirm.

     While Appellants were seeking judicial review of denial of

their social security disability benefits, Congress enacted the

Social Security Disability Benefits Reform Act of 1984, Pub.L. No.

98-460, 98 Stat. 1794 (1984) (codified as amended in scattered

sections of 42 U.S.C.).    The Reform Act mandated that then pending

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judicial actions be remanded to the Secretary of Health and Human

Services for reconsideration under a new standard set forth in the

Reform Act for determining whether disability benefits should be

terminated.      The Reform Act, § 2(d)(2), 42 U.S.C.A. § 423 note at

436-37 (West 1991).        Appellants' actions were so remanded upon

motions of the Secretary.         On remand both Appellants were awarded

continuing benefits under the new standard.            They then petitioned

for attorneys' fees pursuant to EAJA, claiming that they were

"prevailing parties" in their litigation with the Secretary.

         The sole issue before us is whether Appellants are entitled

to costs and attorneys' fees pursuant to EAJA as "prevailing

parties" in their civil actions.1           A party prevails by succeeding

on "any significant issue in litigation which achieves some of the

benefit    the   parties   sought    in     bringing   suit."      Hensley    v.

Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40

(1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st

Cir.1978)). Some circuit courts have concluded that fees should be

awarded a claimant who obtains benefits in a case remanded under

the Reform Act either because his law suit played a role in causing

the reinstatement of benefits or because he would have won in

district court if his claim had not been remanded.                 We have not

previously    addressed    this    issue.      We   examine     each   of   these

     1
      28 U.S.C. § 2412(d)(1). A party is entitled to fees under
EAJA if four separate requirements are met: 1) it is the
prevailing party, 2) it files timely fee application, 3) the
position of the government was not substantially justified, and
4) no special circumstances make an award unjust. 28 U.S.C.A. §
2412(d). This case is decided under the first requirement.

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rationales in turn.

 The "Necessary Cause" Theory: Did the Law Suits Cause Appellants'
Victory?

      The Sixth Circuit has held that such a claimant's law suit was

a   necessary    cause   of   the   favorable   redetermination   of   the

claimant's rights, providing a catalyst for the restoration of

benefits.     Perket v. Secretary of Health & Human Servs., 905 F.2d

129, 134-35 (6th Cir.1990) (alternative holding). Recognizing that

Perket's judicial action was necessary for the remand, the court

found a sufficient link between the litigation and the restoration

of benefits to justify characterizing the claimant as a party

succeeding in litigation.       Id. at 135.     This rationale has also

been called the "but for" causation theory.

      Perket's case (like Appellants' cases) was remanded under the

Reform Act.     His suit was indeed necessary to his eventual receipt

of benefits:     had the suit appealing the agency action not been

pending when the Reform Act was enacted, the final agency decision

denying benefits would have been res judicata.         See Reform Act, §

2(d)(2), 42 U.S.C.A. § 423 note at 436-37 (West 1991) (providing

for remand to the Secretary for redetermination under the new

standard if judicial review was pending on September 19, 1984);2

Perket, 905 F.2d at 135 (res judicata bars redetermination if

Secretary's final decision is not challenged via judicial review)

      2
      The remands of Appellants' judicial actions were ordered
because the actions were pending on the date specified in the
Reform Act. We express no opinion on the correctness of Rhoten
v. Bowen, 854 F.2d 667, 669-70 (4th Cir.1988), in which claimants
had obtained court-ordered remands prior to the passage of the
Reform Act.

                                      3
(citing Bullyan v. Heckler, 787 F.2d 417, 420 (8th Cir.1986)).

         Though   the     suits     are    a       necessary     cause    of    Appellants'

success, we do not think their suits are a sufficient cause of

success to characterize the Appellants as prevailing parties.

Rather, we agree with Guglietti v. Secretary of Health & Human

Services, 900 F.2d 397 (1st Cir.1990), and Hendricks v. Bowen, 847

F.2d 1255 (7th Cir.1988).                 "[T]he mere obtaining of a remand

directed by Congress is not reflective of success on any issue in

plaintiff's suit....            Certainly, the mere temporal coincidence

between    passage      of    the   Reform          Act    and   the     pendency      of   [a

claimant's] appeal, standing alone, seems too frail a link between

bottom-line success and litigation."                      Guglietti, 900 F.2d at 400;

accord Hendricks, 847 F.2d at 1259 (Easterbrook, J., concurring)

("If the award sprang from new legal standards then [the claimant]

was a fortuitous beneficiary, and serendipity is not a reason for

rewarding lawyers.").

     The majority in Hendricks also rejected the hypertechnical

argument that "but for" causation was adequate to show a sufficient

causal    connection         between      the       litigation     and    the    favorable

redetermination      of      benefits.             Hendricks,     847     F.2d    at   1258.

Hendricks concluded that the "proximate cause of [the claimant's]

victory was the congressional enactment of a standard under which

he was entitled to relief."                Id.       The court recognized that the

reason for reinstatement of benefits was not that the Secretary

realized that he was wrong or decided to compromise, but rather

that "Congress mandated reconsideration of all such currently

                                               4
pending claims under a newly enacted standard."                  Id.;    accord

Petrone v. Secretary of Health & Human Servs., 936 F.2d 428, 430

(9th   Cir.1991)   (claimant   "did       not   win    reinstatement    in    the

courtroom;    she won because Congress changed the law."), cert.

denied, --- U.S. ----, 112 S.Ct. 1161, 117 L.Ed.2d 409 (1992);

Guglietti, 900 F.2d at 400 ("but for" argument confuses a condition

of recovery with a cause of recovery);               Shepard v. Sullivan, 898

F.2d 1267, 1272 (7th Cir.1990) (change in governing law causing

Secretary to change his initial determination breaks the chain of

causation and deprives plaintiff of prevailing party status);

Truax v. Bowen, 842 F.2d 995, 997 (8th Cir.1988) ("but for"

argument does not establish causal connection between litigation

and Secretary's    remedial    action).         In    the   present   cases   the

Appellants won because of a change in the law;              we therefore reject

their argument that they prevailed because of their law suits.

 The Catalyst Theory:    Did the Suits Cause the Law to Change?

       A second causation theory rationalizing a fee award under

EAJA is the "catalyst" theory.     This theory recognizes that though

a claimant may not succeed in court if a settlement or remedial

action renders the law suit moot, he may nevertheless be considered

a prevailing party if his law suit was a catalyst in attaining

remedial action.    For example, as Perket recognized, some courts

have considered that a claimant's law suit was a catalyst in

prompting Congress to provide the desired relief by enacting the

Reform Act.   Perket, 905 F.2d at 134 (citing Vitale v. Secretary of

Health & Human Servs., 673 F.Supp. 1171, 1177 (N.D.N.Y.1987)); see

                                      5
also   Robinson     v.    Bowen,    679     F.Supp.   1011,   1014   (D.Kan.1988)

(claimant's suit and thousands like it directly contributed to

Congress' passing the Reform Act), aff'd per curiam, 867 F.2d 600

(10th Cir.1989).

       The   mere   possibility       that      Congress   acted   because     of   an

individual claimant's suit (or reacted to a large number of similar

suits)   is   too    speculative       in    our   view    considering   the    many

influences upon members of Congress in casting their votes.                         We

agree with the cases that have refused to credit the change in law

to a claimant's individual law suit and found the nexus between

Congress's action and the law suit too attenuated.                 E.g., Petrone,

936 F.2d at 430;         Guglietti, 900 F.2d at 401-02;            Hendricks, 847

F.2d at 1258;       Truax, 842 F.2d at 997.

 The "Inevitable Victory" Theory:                If Merits Had Been Reached

        Perket also held that the claimant was the prevailing party

because of his "inevitable victory."                  Perket, 905 F.2d at 133

(alternate holding).            Under this theory, the court surmised that,

absent the fortuitous passage of the Reform Act and the remand it

compelled, the claimant's benefits would have been restored by the

district court.          Id.;     see also Hendricks, 847 F.2d at 1260-61

(Easterbrook, J., concurring) (claimant should recover fees under

EAJA if he would have prevailed in quest for benefits and recovered

fees had the Reform Act never existed).

       We reject this argument because of its "essential fallacy" of

confusing two separate requirements for imposition of fees under

EAJA, namely, that the private litigant prevail and that the

                                            6
government's     position   lack    substantial    justification.3       See

Guglietti, 900 F.2d at 402. "Divining hypothetical error is in our

estimation more properly to be considered on the "substantial

justification' furculum of the standard.          Using it to overcome the

prevailing     party   hurdle    double   counts    and   also   blurs   the

distinction between the two prongs in a way which frustrates

Congress' careful draftsmanship." Id. Where an intervening change

in the law and not the litigation causes the award, we need not

inquire into whether the claimant would have prevailed under the

old standards to determine whether the claimant is a prevailing

party.    See Shepard, 898 F.2d at 1273.     Because Appellants are not

prevailing parties, we do not review the relative merits of the

parties' litigation positions.

         We conclude that the filing of the complaints in these cases

was necessary but not sufficient for the favorable redetermination

of Appellants' benefits.        The enactment of the Reform Act was the

real reason for the awards on remand.        We also reject Appellants'

contentions that their law suits prompted remedial action by

Congress. The purpose of EAJA is to encourage private litigants to

seek review of unreasonable government conduct or to vindicate

     3
      This confusion is manifest in Gowen v. Bowen, 855 F.2d 613
(8th Cir.1988). The district court had denied fees under the
"substantial justification" element of EAJA. See id. at 615.
After finding error in the district court's application of the
"substantial justification" test, id. at 616-17, the Eighth
Circuit confused the two tests by noting that the claimant was a
"prevailing party" simply because the district court "would have
found" the Secretary's position to be without substantial
justification if it had reached the merits of the claimant's
action. Id. at 617 n. 3.

                                      7
their rights by challenging agency action that they would otherwise

comply with to avoid litigation costs.   Herron v. Bowen, 788 F.2d

1127, 1129 (5th Cir.1986). Rewarding private parties for being the

fortuitous beneficiary of a change in statutory rights does not

meet that purpose.

     AFFIRMED.

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