Kauffman v. Schweiker, Civ. A. No. 82-0511.

• Decision Date: 08 March 1983
• Docket Number: Civ. A. No. 82-0511.
• Citation: 559 F. Supp. 372
• Parties: Cleason KAUFFMAN, Plaintiff, v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

559 F. Supp. 372

Cleason KAUFFMAN, Plaintiff, v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Defendant.

Civ. A. No. 82-0511.

United States District Court, M.D. Pennsylvania.

March 8, 1983.

Donald Marritz, Legal Services, Inc., Gettysburg, for plaintiff.

Frederick E. Martin, Asst. U.S. Atty., Lewisburg, Pa., for defendant.

MEMORANDUM

CALDWELL, District Judge.

Before us is the request filed by plaintiff's counsel for attorney fees pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412. Our review of the briefs, the record, and applicable law persuades us that the application for fees should be granted.

I. Background

Plaintiff was the prevailing party in an action brought under Title II of the Social Security Act. Plaintiff's action was filed pursuant to section 205(g) of the Act, 42 U.S.C. § 405(g), for judicial review of the Secretary of Health and Human Services's final decision denying disability benefits. On November 12, 1982, we approved the report of a United States Magistrate recommending that plaintiff's motion for summary judgment be granted.

On December 13, 1982, plaintiff's counsel filed his application for attorney fees in the amount of One Thousand Dollars ($1000) based on the rate of Fifty Dollars ($50) per hour for twenty (20) hours of work. Shortly thereafter plaintiff's counsel filed supporting affidavits from two area attorneys who attested that the rate, as well as number of hours, were reasonable for this kind of matter.

In an order dated January 10, 1983, we directed that a brief from plaintiff's attorney was unnecessary and that any opposition to the application was due within ten (10) days. When an opposing brief was filed, we asked that a brief in support of fees be prepared. Review of this matter has convinced us that our initial impression on the propriety of a fee award was proper.

The attack filed by defendant is twopronged. First, defendant contends that the award of such fees is inappropriate in the present action because plaintiff's counsel is managing attorney of a legal services office and that such offices typically provide free services for indigent clients. Second, defendant asserts that even if fee awards are proper for legal service organizations under some circumstances, they should be denied in the current matter because defendant's position in denying benefits was "substantially justified." We have considered and rejected each of these arguments in arriving at our decision to award attorney fees.

II. Attorney Fee Awards to Legal Service Organizations

Authority for attorney fee awards is found in the following EAJA provisions:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A) (emphasis supplied). The definition of "fees and other expenses," 28 U.S.C. § 2412(d)(1)(C), (2)(A) specifically includes attorney fees not to exceed $75 per hour except when the court finds that a higher fee is justified.

In the present case defendant has concentrated on the use of the word "incurred" in the statute to bolster his argument against a counsel fees award. Defendant contends that plaintiff did not incur fees since legal aid agencies render free services. In support of his argument, however, defendant has cited only one case, the unpublished opinion of the United States District Court for the District of Vermont in Kinne v. Schweiker, No. 80-81 (D.Vt., June 29, 1982) (hereinafter Kinne II). In that case, plaintiff was successfully represented by a law school's legal clinic, which provided free services and supplemented its limited budget through any fee awards that were permitted. In rejecting the fee application, the analysis of Judge Coffrin in Kinne II focused upon the meaning of the word "incurred" and concluded that an attorney fee award was inappropriate if a prevailing party would not be liable to compensate his counsel.

What defendant apparently did not know when he filed his brief, however, was that Judge Coffrin had subsequently reconsidered and vacated his earlier decision. In Kinne v. Schweiker, No. 80-81 (D.Vt., December 29, 1982) (hereinafter Kinne III), a copy of which was submitted with plaintiff's counsel's brief, Judge Coffrin stated that he was "persuaded that this former analysis was incorrect in certain key respects" and "too narrow in its focus." Id. at 2. In particular the Kinne III decision observed,

While it is true that an individual with a patently strong case could probably retain counsel with the incentive of an EAJA award at the successful conclusion, not every strong case appears that way on first inspection and the contingent nature of EAJA awards, combined with the ambiguity of the substantial justification standard, poses an obstacle to individuals seeking representation. Because of its pro bono character, ... a legal service organization may employ a less rigorous calculus and serve the useful function of advancing those cases which although meritorious, do not at first appear to be strong enough to warrant an EAJA fee award. To the extent it does so, and receives such an award, the primary purpose of the EAJA is served by enhancing ... the organization's capability to serve financially needy individuals with claims against the government.

. . . .

... We now deem it unlikely that Congress would expressly make the EAJA applicable to social security actions without commenting on the distinction between pro bono and paid counsel unless it did not intend to draw the distinction.

Id. at 3-4.

In the interim between the decisions in Kinne II and Kinne III, another federal district court in Hornal v. Schweiker, 551 F.Supp. 612 (M.D.Tenn.1982), concluded that the government was not insulated from the payment of attorney fees simply because plaintiff had gratuitous representation by a legal clinic. The Hornal court expressly rejected the Kinne II line of reasoning and cited the following language in the House Report to support its determination that fees "incurred" could be but were not necessarily amounts actually owed by a party to his attorney.

The computation of attorney's fees should be based on prevailing market rates without reference to the fee arrangements between the attorney and client. The fact that attorneys may be providing services at salaries or hourly rates below the standard commercial rates which attorneys might normally receive for services rendered is not relevant to the computation of compensation under the Act. In short the award of fees is to be determined according to general professional standards.

Id. at 616; H.R.Rep. No. 1418, 96th Cong., 2d Sess. 18, reprinted in 1980 U.S.Code Cong. & Ad.News 4953, 4994. See also S.Rep. No. 96-253, 96th Cong., 1st Sess. 1 (1979) at 16-17. The Hornal court concluded that the amount an attorney charged or whether he charged his client at all was irrelevant to a fee award and cited cases decided under other fee shifting statutes as supporting awards to legal service organizations.

Although not confronted with the same circumstances as those in the present matter, the court in Ocasio v. Schweiker, 540 F.Supp. 1320 (S.D.N.Y.1982) recognized the right of a legal services organization to counsel fees under the EAJA. In fact, the Ocasio court summarily observed that indigent plaintiffs fall within the category of a "party" for purposes of the statute.

It is stated that any fees awarded herein will be paid directly to The Legal Aid Society's Civil Division and that no individual attorney will receive any portion of the award. The Legal Aid Society qualifies as a party to the action under 28 U.S.C. § 2412(d)(2)(B) as one described in the Internal Revenue Code, 26 U.S.C. § 501(c)(3).

Id. at 1323 n. 12.

We have doubts about the Ocasio court's use of the 28 U.S.C. § 2412(d)(2)(B)(i) definition of "party" rather than the one found at § 2412(d)(2)(B)(ii),¹ but we have no problem rejecting defendant's suggestion that the plaintiff in the present matter is not within the statutory definition of party. The individual plaintiff obviously did not have a net worth in excess of $1,000,000 at the time the present action was filed and thus falls within the category of a party who may seek counsel fees.

We also have considered and found unpersuasive defendant's contentions that to award counsel fees would be to permit a double recovery. The essence of defendant's argument is that government funding of legal service organizations should preclude their receipt of fee awards from the government. The brief submitted by plaintiff's counsel points out the fallacy of this position and cites primarily the pertinent case of Shadis v. Beal, 685 F.2d 824 (3d Cir.), cert. denied, ___ U.S. ___, 103 S.Ct. 300, 74 L.Ed.2d 282 (1982), wherein a fee award to a legal service organization pursuant to the Civil Rights Attorney Fee Awards Act, 42 U.S.C. § 1988, was upheld. We have found significant parallels in the rationale of the Shadis case to the issue now before us. On the "double-dipping" argument, the court stated,

This rhetorical ploy avoids the issue. The ... government does not pay "twice" when it violates someone's civil rights and is then forced to pay attorney's fees. It pays only once—as a violater of civil rights. Its role as a provider of public services is distinct from its role as a defendant in a civil rights case and has no bearing on the question of reimbursing individual citizens for individual wrong brought upon them.

685 F.2d at 833.

In the present matter the funding of...