Washington v. Heckler

• Decision Date: 06 March 1985
• Docket Number: No. 83-1937,83-1937
• Citation: 756 F.2d 959
• Parties: John E. WASHINGTON, Appellant, v. Margaret M. HECKLER, Secretary of Health and Human Services, Appellee.
• Court: U.S. Court of Appeals — Third Circuit

Page 959

756 F.2d 959

9 Soc.Sec.Rep.Ser. 73

John E. WASHINGTON, Appellant, v. Margaret M. HECKLER, Secretary of Health and Human Services, Appellee.

No. 83-1937.

United States Court of Appeals Third Circuit.

Argued Dec. 6, 1984.

Decided March 6, 1985.

James M. Lafferty, David A. Searles (argued), Community Legal Services, Inc., Philadelphia, Pa., for appellant.

Edward S.G. Dennis, Jr., U.S. Atty., Edward T. Ellis, Asst. U.S. Atty., E.D. Pa., Michael Leonard (argued), Dept. of Health and Human Services, Philadelphia, Pa., for appellee.

Before ALDISERT, Chief Judge, BECKER, Circuit Judge, and STERN, District Judge. ^*

OPINION OF THE COURT

BECKER, Circuit Judge.

This is an appeal by John E. Washington, a social security disability claimant, who became a "prevailing party" against the United States within the meaning of the Equal Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412(d)(1)(A) (1982) (repealed 1984), when the district court reversed an adverse decision of the Secretary of Health and Human Services (the "Secretary") and directed an award of benefits. ¹ Washington was unsuccessful, however, in obtaining an award of counsel fees under the EAJA because the district court decided that the position taken by the Secretary both in the agency and in the district court was substantially justified. There are no disputed facts before us and the sole question for review is whether, on the administrative record, the Secretary has met her burden of showing substantial justification for her agency and litigation positions. We conclude that, in such circumstances, our scope of review is plenary. We also conclude that the position of the Secretary was not substantially justified; hence we will reverse and remand for an award of attorney's fees.

I.

The law applicable to a determination of entitlement to EAJA attorney's fees has been oft-repeated and may be succinctly stated. A party is entitled to attorney's fees "unless the court finds that the position of the United States was substantially justified." 28 U.S.C. 2412(d)(1)(A) (1982). The position of the United States includes not only its litigation position but also the agency position that made the lawsuit necessary. Natural Resources Defense Council v. EPA, 703 F.2d 700, 708 (3d Cir.1983); Dougherty v. Lehman, 711 F.2d 555, 563 n. 12 (3d Cir.1983). Substantial justification "constitute[s] a middle ground between an automatic award of fees to a prevailing party and an award made only when the government's position was frivolous." Dougherty, 711 F.2d at 563. See also Natural Resources Defense Council, Inc. v. EPA, 703 F.2d at 708, 711 (opinion announcing the judgment of the court); id. at 714-15 (concurring opinion); id. at 719 (concurring and dissenting opinion). The burden of proving substantial justification is on the government. Dougherty, 711 F.2d at 561. To meet its burden, the government must show: (1) a reasonable basis in truth for the facts alleged; (2) a reasonable basis in law for the theory it propounds; and (3) a reasonable connection between the facts alleged and the legal theory advanced. Citizens Council of Delaware County v. Brinegar, 741 F.2d 584, 593 (3d Cir.1984); Dougherty, 711 F.2d at 564. The government's burden of showing substantial justification is a strong one and is not met merely because the government adduces "some evidence" in support of its position. Tressler v. Heckler, 748 F.2d 146, 150 (3d Cir.1984).

The case law has not prescribed a comprehensive formula for determining what constitutes a reasonable basis in law. As Dougherty makes clear, there is no per se rule that imposes counsel fees on the government when it loses merely because its legal theory is rejected. ² Dougherty, 711 F.2d at 566. If, for example, the case turns on an unsettled or "close question of law," id., the government usually will be able to establish that its legal theory was "reasonable," even if it was not ultimately accepted as a legal rule by the courts. When the government's legal position clearly offends established precedent, however, its position cannot be said to be "substantially justified."

II.

As yet, few courts of appeals have devoted detailed consideration to the scope of review of district court determinations of substantial justification. The most comprehensive discussion thus far appears in Spencer v. NLRB, 712 F.2d 539, 561-65 (D.C.Cir.1983). The Spencer court, noting the lack of guidance in the statute itself as to the proper standard and the dearth of legislative history on this point, sought insight from both the general principles governing appellate review of district court judgments in civil nonjury cases and the objectives underlying the EAJA. Id. at 563.

A.

Disposing first of basic propositions, the Spencer court concluded, as has this court, see In re Fine Paper Antitrust Litigation, 751 F.2d 562, 584 (3d Cir.1984), that any findings of fact made by a trial judge in the course of ruling on a petition for attorney's fees are subject to review under the "clearly erroneous" standard of Fed.R.Civ.P. 52(a); ³ that the judge's conclusions on questions of law are subject to plenary review; and that determinations deriving from the application of legal standards to the facts of the case are also subject to plenary review. We agree with Spencer on these points.

Turning to the more difficult question, and that relevant here, the Spencer court held that determinations of whether a particular interpretation of the law is plausible or colorable were to be regarded as conclusions of law and reviewed as such. In support of this holding, Judge Edwards stated:

It would appear that, if anything, the special expertise and experience of appellate courts in assessing the relative force of competing interpretations and applications of legal norms makes the case for de novo review of judgments of this order even stronger than the case for such review of paradigmatic conclusions of law. Any uncertainty we might have regarding the appropriate classification of rulings of this kind is alleviated by consideration of the central purpose of the EAJA. The disincentive to challenge unreasonable governmental action caused by fear of incurring large litigation expenses will be significantly reduced only if potential litigants are able to predict reasonably accurately whether they ultimately will be able to recover their attorneys' fees. Their ability to make such predictions, in turn, is dependent on the consistency with which the EAJA is interpreted--i.e., with which the justifications for (losing) legal arguments are assessed. Nondeferential appellate review of such assessments will best achieve a goal of consistency and thus enable the Act more effectually to serve its intended social functions.

712 F.2d at 563-64 (footnote omitted) (emphasis in the original). We also agree with this reasoning.

B.

Because the facts surrounding the controversy in Spencer were undisputed, see id. at 567, the court did not have to decide the scope of review of EAJA decisions where the issue is the district court's evaluation of the plausibility of the government's factual position. In dicta, however, the court reasoned that such judgments are more properly classified as factual findings, subject to clearly erroneous review because "they involve the same kind of evaluation of the credibility of witnesses and weighing of evidence entailed by ordinary findings of fact--and at which trial judges are especially experienced and skilled." Id. at 564. Although the facts in this appeal, as in Spencer, are not disputed, we are squarely presented with this question in the companion case of Dennis v. Heckler, 756 F.2d 971 (3rd Cir.1985) where we focus on the Secretary's factual position. The government contends that the standard of review in such cases should be clearly erroneous.

In concluding that judgments concerning the government's characterization of the underlying facts should be subject to clearly erroneous review, the Spencer court was apparently assuming that the district court would have an opportunity to evaluate the credibility of witnesses and to weigh the evidence. In both Dennis and the instant appeal, however, the district court is performing precisely the same function of reviewing the Secretary's factual and legal position as we perform. Because there is no qualitative difference in the method of the two reviews, we find that there is no reason to defer to the judgment of the district court and therefore conclude that the plausibility of the factual as well as legal basis of the government's position is subject to plenary review. ⁴

We now turn to an analysis of the facts of record and then to the discussion of whether the government's position was substantially justified.

III.

A.

It is undisputed that Washington, a fifty-three year old man with an eighth grade education, has a serious low back condition. After a myelogram revealed a defect at L5, a lumbar laminectomy and nerve root decompression was performed in May 1978 to correct a disc condition. However, John L. Sbarbaro, M.D., an orthopedic surgeon who examined Washington on behalf of the Secretary, reported in October 1979 that Washington had not improved since his surgery and that he had "dramatic stiffness in his low back [which] is characteristic of either a degenerative process or a chronic inflammatory process of the lower back." Administrative Record at 134. Dr. Sbarbaro noted that Washington appeared to be in constant pain and concluded that he "may well be permanently disabled." Id. B. Thakarar, M.D., an orthopedic surgeon who also examined Washington on behalf of the Secretary, reported in August 1981 that Washington had chronic arachnoiditis and degenerative joint disease, and that he was restricted from any activities that require movement of the cervical and lumbar spine area, including pushing, pulling, bending, and prolonged sitting, standing, and walking. Id. at 178. Even Dr....