Hyatt v. Apfel

• Decision Date: 28 October 1997
• Docket Number: No. 96-2062,CA-83-655-C-C-M,96-2062
• Parties: (4th Cir. 1999) PATRICK H. HYATT; HERMAN O. CAUDLE; MARY P. LOVINGOOD, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, and NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, Plaintiff, v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellant. (). . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 188

195 F.3d 188 (4th Cir. 1999)

PATRICK H. HYATT; HERMAN O. CAUDLE; MARY P. LOVINGOOD, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, and NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, Plaintiff, v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellant.

No. 96-2062 (CA-83-655-C-C-M).

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: October 28, 1997.

Decided: October 27, 1999.

Appeal from the United States District Court for the Western District of North Carolina, at Charlotte.

Graham C. Mullen, District Judge.

COUNSEL ARGUED: Howard Stanley Scher, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. John Robbins Wester, ROBINSON, BRAD-SHAW & HINSON, P.A., Charlotte, North Carolina, for Appellees. ON BRIEF: Frank W. Hunger, Assistant Attorney General, Mark T. Calloway, United States Attorney, William Kanter, Appellate Staff, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant. Sarah B. Boucher, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina; Charles McB. Sasser, Douglas S. Sea, COX, GAGE & SASSER, Charlotte, North Carolina, for Appellees.

Before RUSSELL,^* WIDENER, and TRAXLER, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published opinion. Judge Widener wrote the opinion, in which Judge Traxler concurred.

OPINION

WIDENER, Circuit Judge:

Not unexpectedly, this step in this litigation is concerned exclusively with attorneys' fees. We affirm in part, vacate in part, and remand with instructions.

The case arose in the Western District of North Carolina in 1983 as a suit to require the Secretary of Health and Human Services to follow circuit precedent in Social Security cases, especially with respect to pain. It has been the subject of four published opinions of this court, a remand by the United States Supreme Court, and the numerous district court decisions leading up to the appeals. See Hyatt v. Bowen, 476 U.S. 1167 (1986); Hyatt v. Heckler, 757 F.2d 1455 (4th Cir. 1985) (Hyatt I); Hyatt v. Heckler , 807 F.2d 376 (4th Cir. 1986) (Hyatt II); Hyatt v. Sullivan, 899 F.2d 329 (4th Cir. 1990) (Hyatt III); and Hyatt v. Shalala, 6 F.3d 250 (4th Cir. 1993) (Hyatt IV).¹

The history of this litigation has been set out in some detail in our previous opinions, and we will not repeat it here. In our decision in Hyatt III, we affirmed the decision of the district court setting aside Social Security Ruling 88-13, and in Hyatt IV , we approved the fourth and fifth motions for attorneys' fees through June 17, 1988. The first, second, and third motions for attorneys' fees had previously been acted upon and had been awarded under the provisions of 28 U.S.C. § 2412(d)(1)(A) on the basis that the position of the Secretary was not substantially justified.² The fourth and fifth motions for attorneys' fees considered in Hyatt IV were considered under the bad faith standard of 28 U.S.C. § 2412(b).

I.

In the case presently before us, we consider the sixth motion for attorneys' fees for the period from June 19, 1988 through June 19, 1994. Hyatt III was decided March 30, 1990, and the government does not contest the finding of bad faith made by the district court for the period ending March 30, 1990. So a period we consider here is from March 30, 1990 until June 19, 1994.

The district court found the government to be in bad faith because of its previous litigating position, largely or almost wholly concerned with its refusal to follow circuit precedent, and its reluctance or recalcitrance to comply with court decisions in this case.

The government takes the position, however, that the finding of bad faith is not required under Commissioner, INS v. Jean, 496 U.S. 154 (1990), because following our decision in Hyatt III, the government promulgated Social Security ruling 90-1p which, it argues, was consistent with circuit precedent despite the expressed reluctance of the government to promulgate the same. It argues that Jean does not require a finding of bad faith to continue when the bad faith has ceased. Otherwise, the argument goes, a finding of bad faith in a case would operate much like an attainder and would continue indefinitely.

It is true that the plaintiffs contested Social Security Rule 90-1p, but the appeal of the government from an adverse decision of the district court in that case was remanded by agreement on January 24, 1994, and the parties entered into a settlement of all differences in March, 1994. In the meantime, we had decided the case of Hunter v. Sullivan, 993 F.2d 31 (4th Cir. 1992). That was a case involving the very pain standard considered in the Hyatt litigation. Indeed, it involved Social Security Ruling 90-1p. Hunter construes ruling 90-1p to be:

This ruling requires an adjudicator to consider subjective testimony concerning pain if a "physical or mental impairment that could reasonably be expected to cause pain is shown by medically acceptable objective evidence."

993 F.2d at 36. As quoted, this construction of ruling 90-1p is consistent with circuit precedent and effectively completes the overruling of rule 88-13, which commenced the overruling of Social Security ruling 82-58, the ruling which might be considered the principal root of this controversy. See Hyatt v. Heckler, 579 F. Supp 985, 988, et seq. (W.D.N.C. 1984).

The narrow question before us is whether Jean requires, in each case, that a finding be made on the whole case of whether or not the bad faith standard applies, and apply that finding throughout. While in many cases that rule might be true, we believe it is not to be applied in a case such as this in which the government, although reluctant, has surrendered a position it has maintained through the years, even if in bad faith. We arrive at this conclusion by the very language of Jean, which provides "that only one threshold determination for the entire civil action is to be made." 496 U.S. at 154. The example given is of unjustifiable agency action forcing litigation, with the agency then trying to avoid liability by reasonable action during the litigation. Jean, 496 U.S. at 154, n.10. We think that the use of the word threshold does not indicate that the same position with respect to bad faith must be maintained by the courts throughout the litigation, regardless of the performance of the government. But it does mean that once a finding of bad faith has been made, the inferior courts would be justified in continuing that finding unless conditions were shown to have been changed, as here. Were this not the case, the language of the court, in the third-from-the-last sentence of Jean, would have no meaning. That language is:

The EAJA further provides district courts' discretion to adjust the amount of fees for various portions of the litigation, guided by reason and statutory criteria.

Jean, 496 U.S. at 165-66. If the threshold finding of bad faith must be applied at every stage of the litigation, regardless of the government's changed position, that would take from the district courts their discretion "to adjust the amount of fees for various portions of the litigation." Jean, 496 U.S. at 165-66. In the case before us, after years of litigation, the government at last changed its position. That present position has been litigated, and the finding in Hunter is favorable to the government. We are thus of opinion that it was an abuse of the district court when it did not find a lack of bad faith beginning with March 30, 1990.³

Along the same line, since the position of the government has been litigated and upheld, we think the government's position has been substantially justified commencing with March 30, 1990.

II.

The district court awarded market-rate fees, but we think this was error. It should have awarded fees at the historic rate. See Library of Congress v. Shaw, 478 U.S. 310 (1986); National Wildlife Fed. v. Hanson, 859 F.2d 313, 318 (4th Cir. 1988).

III.

The government has conceded that the plaintiffs' attorneys are entitled to fees for their work on the fourth and fifth fee petitions at the rates in effect at the time the work was performed. We agree.

IV.

The last point we consider is whether the district court's application of a 1.333 multiplier for exceptional results should be affirmed. The subject has been discussed in Hensley v. Eckerhart, 461 U.S. 424 (1983); Blum v. Stenson, 465 U.S. 886 (1984); Pennsylvania v. Delaware Valley Citizens Council, 478 U.S. 546 (1986); and the same case, reargued on one point, Pennsylvania v. Delaware Valley Citizens Council, 483 U.S. 711 (1987); not to mention our case of Lyle v. Food Lion, 954 F.2d 984 (4th Cir. 1992).

The upshot of these cases is that many or most of the reasons initially considered by the inferior federal courts to entitle an attorney to an enhancement of a fee figured at a rate times hours spent have been qualified or minimized so that they would have no effect here. But the item which has survived is an enhancement for "certain `rare' and `exceptional' cases, supported by both `specific evidence' on the record and detailed findings by the lower courts." Delaware Valley, 478 U.S. at 565. The district court found this was such a case,...