Court Opinion

ID: 171045
Source: CourtListenerOpinion
Date Created: 2010-08-14 18:26:16+00
Date Added: 2024-06-11T17:25:11.142757
License: Public Domain

FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                     UNITED STATES COURT OF APPEALS                  July 31, 2008
                                                                 Elisabeth A. Shumaker
                           FOR THE TENTH CIRCUIT
                                                                     Clerk of Court

    MELINDA R. SANDERS,

               Plaintiff-Appellant,

    v.                                                 No. 07-7102
                                           (D.C. No. 6:05-CV-00005-RAW-SPS)
    MICHAEL J. ASTRUE,                                  (E.D. Okla.)
    Commissioner, Social Security
    Administration,

              Defendant-Appellee.
    ______________________________

    GARY SMITH,

               Plaintiff-Appellant,

    v.                                                 No. 07-7104
                                          (D.C. No. 6:06-CV-00112-RAW-KEW)
    MICHAEL J. ASTRUE,                                 (E.D. Okla.)
    Commissioner, Social Security
    Administration,

               Defendant-Appellee.

                            ORDER AND JUDGMENT *

*
      After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Before McCONNELL, ANDERSON, and BRORBY, Circuit Judges.

      Plaintiffs Melinda R. Sanders and Gary K. Smith appeal from district court

orders denying their motions for fees under the Equal Access to Justice Act

(EAJA), 28 U.S.C. § 2412, incurred to litigate whether the payment of an earlier

award of EAJA fees should be made to each plaintiff or to his or her attorneys.

These cases involve very similar facts and legal issues and we have elected to

resolve them together in a single order and judgment. We exercise jurisdiction

under 28 U.S.C. § 1291 and affirm in both cases.

                                    Background

      Plaintiffs Sanders and Smith brought separate actions in the district court

seeking to overturn adverse agency decisions on their respective social security

claims. They were represented by the same attorneys. Both plaintiffs prevailed

on the merits and their cases were remanded to the agency for further

proceedings. Then each plaintiff successfully sought EAJA attorney fees,

including fees for preparing each EAJA fee motion. Ms. Sanders was awarded

$3,857.50. Mr. Smith was awarded $5,605.20. The Commissioner did not object

to the amount of the EAJA attorney fees awarded in either case, but took the

position that the money should be paid to the respective plaintiffs, not to their

attorneys. In Mr. Smith’s case, the Commissioner stated his objection to the

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payee in his response to the request for EAJA fees. In Ms. Sanders’ case, after

the district court awarded the initial EAJA fee, the Commissioner filed a motion

under Fed. R. Civ. P. 59(e) to alter or amend the judgment to make the payment

to Ms. Sanders, not her attorneys. 1

      The district court ruled that the checks should be made payable to the

attorneys. 2 Plaintiffs then requested the district court to award them attorney fees

under the EAJA to compensate their attorneys for litigating the question of how

payment of the initial fee should be made. The district court denied the request

for “fees-for-fees” in each case. 3 Plaintiffs appeal.

                                       Analysis

      Under the EAJA, a private party may be entitled to an award of “‘fees and

other expenses’” if he or she “prevail[s] in litigation against the United States

[and] if, among other conditions, the position of the United States was not

1
       Our standard of review for an order denying a Rule 59(e) motion is the
same as that for an order denying EAJA fees: abuse of discretion. See Manning
v. Astrue, 510 F.3d 1246, 1249 (10th Cir. 2007) (holding no mistake in EAJA
order, so no abuse of discretion in denying post-judgment relief), petition for cert.
filed, 76 U.S.L.W. 3637 (U.S. May 22, 2008) (No. 07-1468); Loughridge v. Chiles
Power Supply Co., 431 F.3d 1268, 1275 (10th Cir. 2005) (reviewing for abuse of
discretion district court’s ruling on Rule 59(e) motion).
2
      This practice was subsequently rejected in Manning, 510 F.3d at 1249,
where the plaintiff was represented by the same counsel as in this case.
3
      In Ms. Sanders’ case, the district court entered an alternative order for a
reduced amount. We do not address this reduction because we affirm the order
denying EAJA fees.

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‘substantially justified.’” Comm’r v. Jean, 496 U.S. 154, 156 & n.1 (1990)

(quoting 28 U.S.C. § 2412(d)(1)(A)). EAJA fees may be awarded for litigation

over EAJA fees and the initial “finding that the Government’s position lacks

substantial justification, like the determination that a claimant is a ‘prevailing

party,’ . . . operates as a one-time threshold for fee eligibility.” Id. at 157, 160.

The district court has discretion to determine the amount of such a fee, or whether

to award one at all. See Kopunec v. Nelson, 801 F.2d 1226, 1229 (10th Cir.

1986); cf. Pierce v. Underwood, 487 U.S. 552, 562 (1988) (holding district

court’s determination under EAJA whether government’s position was

substantially justified reviewed for abuse of discretion). “[T]he district court’s

task of determining what fee is reasonable is essentially the same as that

described in Hensley [v. Eckerhart, 461 U.S. 424, 433-37 (1983)].” Jean,

496 U.S. at 161. “The result is what matters.” Hensley, 461 U.S. at 435.

      Plaintiffs first argue that the district court abused its discretion in denying

their requests for EAJA fees by concluding in error that neither of them received

any monetary benefit from the fee litigation. They maintain that an EAJA fee

inures to a plaintiff’s benefit because it reduces the amount he or she must pay

from his or her social security award. “Attorneys handling Social Security

proceedings in court may seek fees for their work under both the EAJA and

[42 U.S.C. § 406(b)].” McGraw v. Barnhart, 450 F.3d 493, 497 (10th Cir. 2006).

Fees under § 406(b) are paid out of the claimant’s social security benefits, while

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EAJA fees are paid out of agency funds. Id. If a fee award is made under both

the EAJA and § 406(b), the claimant’s attorney must refund the smaller of the

fees to the claimant. Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002).

Therefore, an award of EAJA fees “effectively increases the portion of past-due

benefits the successful Social Security claimant may pocket.” Id.

      The Commissioner does not dispute that the first award of EAJA fees for

services rendered in obtaining a remand to the agency on behalf of each plaintiff

effectively increased the benefits each of them would receive if their attorneys

also were awarded a fee under § 406(b). Plaintiffs argue that an award of

additional EAJA fees will similarly increase their benefits when offset against any

eventual § 406(b) attorney-fee award. Even if this is true, the district court

correctly recognized that the result obtained does not warrant additional EAJA

fees. We do not find an abuse of discretion in denying EAJA fees simply because

awarding them may increase the pot from which a plaintiff can offset § 406(b)

attorney fees. Rather, the district court must evaluate the fee request under

Hensley, see Jean, 496 U.S. at 161, and the amount of the attorney fee should be

“reasonable in relation to the results obtained,” Hensley, 461 U.S. at 440.

      We agree with the district court that the litigation over how the check

should be made out for the first EAJA award did not increase the initial EAJA

award or benefit the plaintiffs. The second litigation resulted only in having the

first award paid directly to the attorneys, which benefitted counsel, not plaintiffs.

                                          -5-
“The EAJA . . . was not enacted for the benefit of counsel to ensure that counsel

gets paid.” Manning, 510 F.3d at 1251. The result obtained did not warrant an

award of EAJA fees and the district court did not abuse its discretion in denying

such an award.

      Plaintiffs next assert that they benefitted from the fees litigation because by

having the EAJA amounts paid directly to counsel, rather than to them directly,

the government was prevented from offsetting any debt either plaintiff may owe

to another federal agency out of the EAJA fees. “Under the Debt Collection

Improvement Act, the Department of the Treasury’s Financial Management

Service has the authority to collect nontax debts owed to the United States

government by offsetting payments made by other federal agencies.” Id. at 1255

(citing 31 U.S.C. § 3176; 31 C.F.R. § 285.5(a)(1)). This argument is speculative

because neither plaintiff suggests that he or she is subject to an offset from his or

her social security benefits. More to the point, given our holding in Manning that

EAJA fees are subject to the offset, id. at 1256, claimants are not entitled to this

asserted benefit of the order directing payment to the attorneys. We also reject

plaintiffs’ argument that they could use a second EAJA award to pay their debts

to the government, thus receiving a benefit from such a windfall, because that is

not the purpose of EAJA fees.

      Plaintiffs further contend that if attorneys are not allowed to collect EAJA

fees for litigating EAJA fee orders, the government will have an incentive to

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contest EAJA attorney fees. The government did not contest the entitlement to,

or the amount of, the initial EAJA attorney fee awarded to each plaintiff.

Furthermore, each request included attorney fees for preparing the EAJA motion.

Thus, it is inaccurate to characterize the second EAJA litigation as a challenge to

either plaintiff’s request for EAJA fees. Moreover, the district court did not hold

that a plaintiff can never receive EAJA fees for litigating EAJA fees.

      Finally, plaintiffs posit that EAJA fees should be awarded on fee litigation

in order to advance the purpose of the EAJA. Otherwise, they suggest, an entire

class of persons–the disabled–will be denied access to the courts. “[T]he specific

purpose of the EAJA is to eliminate for the average person the financial

disincentive to challenge unreasonable governmental actions.” Jean, 496 U.S. at

163. We are not persuaded that these plaintiffs had a financial incentive to

litigate who should receive the check for the initial EAJA fees because we agree

with the district court that the purpose of the “fees-for-fees” litigation was to

benefit the attorneys.

                                          -7-
                                    Conclusion

      The district court did not abuse its discretion in denying EAJA attorney

fees for litigation over whether the check for the initial award of EAJA attorney

fees should be paid to plaintiffs or to their attorneys. Accordingly, the judgment

of the district court in each case is AFFIRMED.

                                                    Entered for the Court

                                                    Stephen H. Anderson
                                                    Circuit Judge

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