Marcus v. Shalala
| Citation | 17 F.3d 1033 |
| Decision Date | 24 May 1994 |
| Docket Number | No. 92-3038,92-3038 |
| Parties | , 43 Soc.Sec.Rep.Ser. 748, Unempl.Ins.Rep. CCH (P) 17733A Esther MARCUS, et al., Plaintiffs-Appellees, v. Donna E. SHALALA, * Secretary of Health and Human Services, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Helen Cropper, John M. Bouman (argued), Robert E. Lehrer, Martha Tonn, Mary E. Kopko, David Yen, Legal Assistance Foundation of Chicago, Chicago, IL, for plaintiffs-appellees.
Donald T. McDougall, Dept. of Health and Human Services, Region V, Office of Gen. Counsel, Chicago, IL, William Kanter, Matthew M. Collette (argued), Dept. of Justice, Civ. Div., Appellate Section, Washington, DC, for defendant-appellant.
Before CUMMINGS and RIPPLE, Circuit Judges, and WILLIAMS, Senior District Judge. ****
Plaintiffs challenged regulations involving two disability benefits programs under the Social Security Act: one for children under the Supplemental Security Income program of Title XVI of the Act and the other for surviving spouses and divorced spouses of deceased wage earners under 42 U.S.C. Sec. 402 of Title II of the Act. To qualify for disability benefits under these programs, the Secretary's rules and regulations required claimants to show that they had an impairment that was the same as or equivalent to one of the approximately 120 impairments in the Secretary's Listing of Impairments. See Marcus v. Bowen, 696 F.Supp. 364, 371-373 (N.D.Ill.1988) ("Marcus I "). Claimants who did not meet all of the specified medical criteria for any of the qualifying impairments in the Listing were denied benefits. Id. at 372. Although a claimant who did not have an impairment depicted in the listing could show that his impairment or combination of impairments was equivalent to a listed impairment, the overall functional impact of the impairments could not be considered. Id. at 373.
Plaintiffs' position in Marcus I was that the Secretary's regulations and rulings resulted in the denial of disability benefits to class members without an individualized assessment of a claimant's ability to engage in gainful activity. Id. at 367. According to plaintiffs, the statutory scheme required the Secretary to make an individualized assessment of a claimant's impairments, considering the combined impact of all impairments on the claimant's ability to engage in gainful activity and measuring disability in relation to functional, workplace limitations. Id.
The district court granted summary judgment in favor of the plaintiffs, ruling that the statute did not authorize the Secretary to engage in what it described as "cookbook adjudication." Id. at 376. The Secretary appealed. While the appeal was pending, the Supreme Court decided the children's program issue favorably for plaintiffs. Sullivan v. Zebley, 493 U.S. 521, 110 S.Ct. 885, 107 L.Ed.2d 967 (1990). Consequently, the government withdrew its appeal of the children's issue. This Court affirmed the district court as to the remaining claims in the appeal. Marcus v. Sullivan, 926 F.2d 604 (7th Cir.1991) ("Marcus II "). Subsequently, plaintiffs filed an application in the district court for attorney's fees and costs under the Equal Access to Justice Act. The district court granted the application and awarded $252,797.68 in attorney's fees and $1500.17 in costs.
Title 28 U.S.C. Sec. 2412(d)(1)(A) provides:
Except as otherwise provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
The Secretary does not dispute that plaintiffs were the prevailing parties. Rather, she contests the district court's determination that the government's position was not substantially justified.
The Secretary attacks the district court's determination on two grounds. First, she argues that the district court applied an incorrect legal standard to determine whether the government's position was substantially justified. Second, the Secretary contends that the government's litigating position was, in fact, substantially justified. As a corollary to her second argument, the Secretary argues that the district court's distinction between the government's litigation position and the underlying agency conduct was inappropriate.
Under the EAJA, the government bears the burden of proving that its position was substantially justified. Cummings v. Sullivan, 950 F.2d 492, 495 (7th Cir.1991). The "position of the United States" includes the underlying agency conduct as well as the agency's litigation position. 28 U.S.C. Sec. 2412(d)(2)(D). The EAJA does not define the term "substantially justified." However, the Supreme Court has held that the position of the United States is substantially justified if it is " 'justified in substance or in the main'--that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988). The Underwood Court provided further guidance on this standard, noting that
... [A] position can be substantially justified even though it is not correct, and we believe that it can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.
Id. at 566 n. 2, 108 S.Ct. at 2550 n. 2. In making this determination, it is appropriate for the district court to consider the government's litigating position as well as its prelitigation conduct--the action or inaction that gave rise to the litigation. Cummings, 950 F.2d at 496. EAJA fees may be awarded if either the government's prelitigation conduct or its litigation position are not substantially justified. See McDonald v. Secretary of Health and Human Services, 884 F.2d 1468, 1476 (1st Cir.1989). However, the district court is to make only one determination for the entire civil action. Commissioner, INS v. Jean, 496 U.S. 154, 159, 110 S.Ct. 2316, 2319, 110 L.Ed.2d 134 (1990). Thus, fees may be awarded in cases where the government's prelitigation conduct was not substantially justified even though its litigating position may have been substantially justified and vice versa. In other words, the fact that the government's litigating position was substantially justified does not necessarily offset prelitigation conduct that was without a reasonable basis.
The Secretary argues that the district court applied the incorrect legal standard in awarding fees. We review this issue de novo. Hadden v. Bowen, 851 F.2d 1266, 1268 (10th Cir.1988).
In its order awarding fees, the district court began its analysis by citing the Underwood reasonable basis test. It also noted that under Cummings, the government's position includes both its prelitigation conduct and its litigating position. Marcus v. Sullivan, 793 F.Supp. 812, 814 (N.D.Ill.1992) ("Marcus III "). In the Secretary's opinion, however, the district court paid lip service to Underwood and Cummings by following its discussion of those cases and related authority with the statement, "We begin here with the premise that the Secretary's regulations would have been upheld if they had reasonably implemented the statute ..." Id. at 815. In the Secretary's opinion, this statement indicates that the district court impermissibly created and relied on a presumption that the regulations would have been upheld had they been substantially justified. The Secretary also argues that there is no case law to support the district court's statement that "it remains the uncommon occurrence where an agency will avoid paying EAJA attorney fees after a judicial determination that its underlying position was arbitrary and capricious." Id. According to the Secretary, the district court's language creates a general rule that fees will be awarded unless the agency can show exceptional circumstances, a rule which runs contrary to congressional intent.
We disagree. The district court stated explicitly that there is no presumption that a prevailing party is entitled to fees under the EAJA. Id. The premise the district court used in its analysis is an accurate statement of law and fact: the regulations would have been upheld if they had reasonably implemented the statute. Nowhere in its order does the district court suggest that its decision to award fees turned on this fact. Nor does the decision equate loss on the merits with lack of substantial justification. Instead, the decision was based on the cumulative litigation history, a permissible consideration. The Secretary's argument that the district court adopted the general rule entitling prevailing parties to fees in all but exceptional circumstances is based on a contorted reading of the district court's order. It is also an argument based on snippets of the order that the Secretary has taken out of context. When read in its entirety, the district court's order indicates...
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