Linquist v. Bowen
| Decision Date | 24 March 1988 |
| Docket Number | Nos. 86-1486,86-1790 and 86-2075,s. 86-1486 |
| Citation | 839 F.2d 1321 |
| Parties | , 20 Soc.Sec.Rep.Ser. 527, Unempl.Ins.Rep. CCH 17,891 Lois LINQUIST and Alberta E. Burns, Appellees, v. Otis R. BOWEN, Secretary of the Department of Health and Human Services, and United States Railroad Retirement Board, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Frank A. Rosenfeld, Washington, D.C., for appellants.
Gill Deford, Los Angeles, Cal., for appellees.
Before LAY, Chief Judge, HEANEY and BOWMAN, Circuit Judges.
In Linquist v. Bowen, 813 F.2d 884 (8th Cir.1987), this court upheld the district court's decision in a nationwide class action concerning the provisions under the Social Security Act, 42 U.S.C. Secs. 301-1397f (1982) and the Railroad Retirement Act, 45 U.S.C. Secs. 231-231v (1982) that each required an offset against an individual's benefits of fifty cents for each dollar the individual earned in excess of the exempt amount. The plaintiff class asserted that retired persons covered by both Acts should have their benefits reduced by only a single fifty-percent offset even though each statute separately required such an offset. The district court ordered that the agencies collect a total of only fifty percent in offsets and required retroactive refunds of benefits back to 1972 for those who had had two offsets collected from their benefits. The Secretary obtained from this court a stay of the district court order pending appeal. In addition to its challenge of the merits, the government raised several jurisdictional arguments. This court sustained jurisdiction over both the Secretary and the Board under mandamus. 813 F.2d at 888.
After oral argument and full review of the record, this court affirmed the judgment of the district court. We held that applying both offsets would fail to serve the overriding congressional intent to encourage the elderly to continue working. In sustaining the district court we disagreed with the District of Columbia Circuit Court of Appeals, which reached the opposite result in Burns v. United States R.R. Retirement Bd., 701 F.2d 193 (D.C.Cir.1983) (). The government acquiesced in our judgment and did not petition for certiorari.
Thereafter the counsel for the plaintiff class, the Legal Aid of Western Missouri and the National Senior Citizens Law Center, moved for attorney's fees under the Equal Access to Justice Act, 28 U.S.C. Secs. 2412(b) and (d). On September 1, 1987, this court overruled the government's objection and found that the claimant class had successfully established a common benefit for a class of some 2,000 people and that as such plaintiffs were entitled to a fee "to the same extent that any other party would be liable under the common law." This court did not reach the question as to whether plaintiffs were entitled to recover attorney's fees under 28 U.S.C. Sec. 2412(d).
We now vacate our order of September 1, 1987, and hold that plaintiffs' attorneys have not demonstrated a legal basis permitting recovery under either section 2412(b) or section 2412(d).
Section 2412(d) 1
Although counsel has urged on rehearing that the plaintiff class is entitled to attorney's fees under section 2412(d) because the government was not substantially justified in its conduct in withholding payment and in its litigation defense, we cannot agree. The test for substantial justification was set forth in United States v. 1,378.65 Acres of Land, 794 F.2d 1313 (8th Cir.1986). In that case we said: "In meeting that standard, we conclude that the Government now must show not merely that its position was marginally reasonable; its position must be clearly reasonable, well founded in law and fact, solid though not necessarily correct." Id. at 1318 (footnote omitted). We find that the government, although in error in assessing the one hundred-percent offset accumulated under both statutes, was neither litigating in bad faith nor without substantial justification for its position.
In the litigation in this court the government not only challenged the statutory interpretation of both acts but also challenged the jurisdiction of both the district court and this court to pass upon the claim. These jurisdictional arguments are set forth in our prior opinion. Although we ruled against the government on those issues as well, we cannot say that the government either acted in bad faith or was without substantial justification in raising those jurisdictional challenges. In addition, as we appraise the merits of the case, we find that three judges of this court felt the issue on the merits was sufficiently close to enter an order staying the effects of the district court's order of relief. That stay order remained in effect until our opinion was entered.
Throughout the litigation, the government urged that the analysis made by our sister circuit in the District of Columbia was correct. We note that a distinguished panel of judges sat on the appeal in the District of Columbia, and although we did not agree with that panel's holding, it is difficult for us to say that their analysis was lacking in persuasive effect or reason. We found the issue on the merits to be a close one and although we gave great import to the analysis of the government and the D.C. Circuit we felt the more persuasive reasoning and analysis compelled the opposite result. Under these circumstances, it would be difficult for us to say that the government's position was not substantially justified so as to entitle plaintiffs to recover attorney's fees under 28 U.S.C. Sec. 2412(d).
Section 2412(b) 2
We now turn to the argument concerning section 2412(b). That section permits recovery of attorney's fees by a successful litigant in a suit against the government "to the same extent that any other party would be liable under the common law * * *." There are three recognized exceptions to the American rule 3 which the plaintiffs may assert in order to recover attorney's fees under that subsection. In the legislative history relating to the passage of section 2412(b), the committee report makes reference to the liability of the United States for fees under "bad faith", "common fund", and "common benefit" theories. 4
Under 28 U.S.C. Sec. 2412(c)(2) Congress has expressly stated that the agencies themselves are not directly responsible for any fees awarded under section 2412(b) unless there is a finding of bad faith. Absent such a finding, section 2412(c)(2) states that the fees are to be paid by the Treasury. The legislative history clarifies that this is the intended result:
To allow recovery of fees from the agencies or from the U.S. Treasury, and to authorize appropriations for that purpose. The Senate bill had provided that funds for most of this bill come from the agencies involved, and that no appropriations could be made for this specific purpose. This restriction was opposed as unduly punitive (there is an accounting procedure in the reporting section), and would result in a forced appropriation. This amendment insures that the prevailing party will be awarded a fee if it meets the requirements in the bill. It also keeps the language providing payment for "bad faith" actions by the agency involved.
H.R. 96-1418, 96th Cong.2d Sess. 12, reprinted in 1980 U.S.Code Cong. & Admin.News 4984, 4991.
The common fund theory permits a successful litigant to recover attorney's fees from the fund created by the litigation. The attorney's fees are thus paid proportionately by the non-litigating members of the class. 5 There is thus a more direct sharing in the award of attorney's fees by all the members of the class who benefited from the plaintiff's efforts. Thus it is somewhat anomalous to say that fees are charged against the government in that instance. Under a common fund theory, the primary benefit to be derived by a plaintiff class from section 2412(b) is that the fee may be awarded when the action is against the United States. In that sense, the United States waives its sovereign immunity to allow the claim for such fees. The D.C. Circuit has recognized the common fund theory, but a contrary result has been reached by the Tenth Circuit which said the common fund exception cannot be asserted against the United States, because the fundamental theory of the common fund recovery is not compatible with the fact that the United States Treasury would have to pay the attorney's fees. Compare Puerto Rico v. Heckler, 745 F.2d 709 (D.C.Cir.1984) with Jordan v. Heckler, 744 F.2d 1397 (10th Cir.1984). As noted above we need not decide the applicability of the common fund theory as counsel waived recovery under that theory. See n. 5, supra.
There are two other possible theories upon which the plaintiff might prevail under section 2412(b), assuming that the theories are recognized at common law. The first of these two possible theories is the common benefit theory under which this court originally awarded the fees; the other possibility is if there is some equitable theory available to plaintiffs as private attorneys general.
The Supreme Court's decisions in Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973) and in Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970) () recognize a recovery under the common benefit theory. There is no question that the plaintiff class has established a common benefit for a class of some 2,000 people. In this sense we find the suit has served public policy and that there is much merit in Linquist's argument that there is public good in the...
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