Kadelski v. Sullivan ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
7-7-1994
Kadelski v. Sullivan
Precedential or Non-Precedential:
Docket 93-1891
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Recommended Citation
"Kadelski v. Sullivan" (1994). 1994 Decisions. Paper 77.
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
NO. 93-1891
____________
WALTER KADELSKI,
Appellant
v.
LOUIS W. SULLIVAN, Secretary
of Health and Human Services
____________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
D.C. No. 89-cv-04430
____________
Submitted Under Third Circuit LAR 34.1(a) March 24, 1994
Before: HUTCHINSON, ROTH, and ROSENN, Circuit Judges
Opinion Filed July 8, l994
____________
THOMAS R. YORKO, ESQ.
Bomze & Yorko, P.C.
Suite 1300
140l Arch Street
Philadelphia, PA 19102
Attorney for Appellant
STEVEN M. ROLLINS, ESQ.
Department of Health & Human Services
3535 Market Street
Room 9100
Philadelphia, PA 19101
Attorney for Appellee
____________
OPINION OF THE COURT
____________
ROSENN, Circuit Judge.
1
This appeal presents a procedural issue, the
determination of which has significant substantive consequences:
does a remand order to a federal administrative agency by a
United States District Court adopting the Report and
Recommendation of a magistrate judge, which constitutes a
judgment, require that it be set forth in a separate document as
provided by Federal Rule of Civil Procedure 58? The district
court held that its order need not be stated in a separate
document and therefore denied as untimely the appellant's
application for attorney's fees under the Equal Access to Justice
Act (EAJA), 28 U.S.C. § 2412(d). Appellant timely appealed. We
vacate and remand.
I.
In 1988, Appellant Walter Kadelski, filed an
application for disability insurance benefits under Title II of
the Social Security Act, 42 U.S.C. § 401 et seq. After the
Secretary of Health and Human Services (the Secretary) denied his
request for benefits, Kadelski, pursuant to 42 U.S.C. § 405(g),
sought judicial review by filing suit in the United States
District Court for the Eastern District of Pennsylvania. In
response to cross-motions for summary judgment, a magistrate
judge concluded that the administrative law judge's (ALJ)
decision was not supported by substantial evidence. Accordingly,
the magistrate judge recommended that the case be remanded to the
Secretary for further administrative proceedings. On March 2,
1992, the district court issued an order adopting the magistrate
2
judge's Report and Recommendation as the decision of the court.1
Upon remand, the Secretary found that Kadelski was
entitled to disability insurance benefits. Subsequently, on
January 11, 1993, Kadelski returned to the district court and
filed his application for attorney's fees and costs under the
EAJA. The court, finding that Kadelski had failed to apply for
an EAJA Award "within 30 days of final judgment in the action",
28 U.S.C. § 2412(d)(1)(B), denied the application as untimely.
Kadelski's motion for reconsideration was also denied. On April
5, 1993, the district court vacated its March 30, 1993 order
pending the outcome of a similar case, Shalala v. Schaefer, 113
1
The district court's remand order reads as follows:
ORDER
AND NOW, this 2nd day of March, 1992, upon
careful consideration of the Report and
Recommendation of United States Magistrate
Judge Richard A. Powers, III in this action,
and the Court concluding that [the]
Magistrate Judge's . . . thorough analysis is
completely persuasive, and in the absence of
exceptions to the Report and Recommendation,
it is hereby ORDERED that:
1. The Report and Recommendation of February
12, 1992 is Approved and the analysis therein
is ADOPTED as that of the court;
2. Plaintiff's motion for summary judgment
is DENIED and defendant's motion for summary
judgment is DENIED;
3. This action shall be REMANDED to the
Secretary for reconsideration by the
Administrative Law Judge consistent with
the opinion of Magistrate Judge Powers and
with the aid of a medical advisor in
conformity with Social Security Rule 83-
20.
3
S. Ct. 2625 (1993). After Schaefer was decided, the district
court once again denied Kadelski's application. Kadelski's
subsequent motion to vacate that order was denied. Kadelski
appealed.
II.
Although determinations of attorney fee awards under
the EAJA are generally reviewed under an abuse of discretion
standard, Pierce v. Underwood, 487 U.S. 552, 562 (1988),
questions of law, such as the proper interpretation of the EAJA
and Supreme Court precedent, are subject to plenary review.
Dewalt v. Sullivan, 963 F.2d 27, 29 (3d Cir. 1992).
The EAJA provides that the district court
shall award to a prevailing party other than
the United States fees and other expenses, .
. . incurred by that party in any civil
action (other than cases sounding in tort),
including proceedings for judicial review of
agency 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.
28 U.S.C. § 2412(d)(1)(A). As a prerequisite to an award of
fees, a claimant must file an application for fees "within thirty
days of final judgment in the action." Id. at § 2412(d)(1)(B).
The statute defines "final judgment" as "a judgment that is final
and not appealable." Id. at § 2412(d)(2)(G).
In reviewing final agency decisions regarding
disability insurance benefits, a district court may remand to the
Secretary for reconsideration. 42 U.S.C. § 405(g) (Supp. 1994).
In Melkonyan v. Sullivan, 111 S. Ct. 2157 (1991), the Supreme
Court explained that the two kinds of remand permitted by the
statute are the exclusive methods by which a district court may
remand a case to the Secretary. Sentence four of § 405(g)
4
provides "[t]he [district] court shall have power to enter, upon
the pleadings and transcript of the record, a judgment affirming,
modifying, or reversing the decision of the Secretary, with or
without remanding the cause for a rehearing." 42 U.S.C. §405(g).
The sixth sentence of 42 U.S.C. § 405(g) provides:
The court may, on motion of the Secretary
made for good cause shown before he files his
answer, remand the case to the Secretary for
further action by the Secretary, and it may
at any time order additional evidence to be
taken before the Secretary, but only upon a
showing that there is new evidence which is
material and that there is good cause for the
failure to incorporate such evidence into the
record in a prior proceeding; and the
Secretary shall, after the case is remanded,
and after hearing such additional evidence if
so ordered, modify or affirm his findings of
fact or his decision, or both, and shall file
with the court any such additional and
modified findings of fact and decision, and a
transcript of the additional record and
testimony upon which his action in modifying
or affirming was based.
Id.In Schaefer, the Supreme Court reaffirmed its previous
holdings that a remand order pursuant to sentence four of
§405(g), as opposed to sentence six, constitutes a judgment,
which squarely falls within the term "final judgment" as used in
the EAJA, when it no longer can be appealed. Schaefer, 113 S.Ct.
at 2629 (citations omitted).2 Thus, at the outset we must
ascertain the nature of the remand order to determine if the
2
We note parenthetically that the Court's holding in Schaefer
that a district court cannot retain jurisdiction upon remanding a
case pursuant to sentence four, Schaefer, 113 S.Ct. at 2629-30,
and its holding that a claimant who obtains judgment under
sentence four is deemed a prevailing party for purposes of the
EAJA, id. at 2631, overrules our holdings to the contrary in
Persichetti v. Secretary, Health and Human Services, 990 F.2d 80(3d Cir. 1993).
5
district court entered final judgment in the case. A district
court may order a sentence-six remand in only two situations:
where the Secretary requests a remand before answering the
complaint, or where new, material evidence is adduced that was
for good cause not presented before the agency. See §405(g)
(sentence six); Schaefer, 113 S.Ct. at 2629 n.2. As the district
court's remand order does not fit within either situation, it was
unquestionably entered pursuant to sentence four.
Having determined that the district court's remand
order was a fourth-sentence remand, we now proceed to determine
if Kadelski's fee application was timely filed. As noted above,
the Court in Schaefer reiterated that a fourth-sentence remand
order constitutes a "final judgment," when it no longer is
subject to appeal. Id. at 2929. Rule 4(a) of the Federal Rules
of Appellate Procedure establishes that the time for appeal from
a civil case in which an officer of the United States is a party
is sixty days after entry of judgment in the district court. A
prevailing party must then file an application for attorney's
fees within thirty days after the time for appeal has expired.
See §§ 2412(d)(1)(B), (d)(2)(G); Schaefer, 113 S.Ct. at 2632.
Kadelski filed his application more than 90 days after
the remand order which constituted the judgment in the case.
Thus, at first blush, his application does not seem to satisfy
the requirements of the EAJA. Nevertheless, Kadelski's claim is
not time barred because the district court did not enter a
separate document as required by Federal Rule of Civil Procedure
58. Schaefer, 113 S.Ct. at 2632. The Rule not only requires
6
that every judgment be formally set forth "on a separate
document," but that "[a] judgment is effective only when so set
forth and when entered as provided in Rule 79(a)." Fed. R. Civ.
P. 58. The entry of such a separate document unequivocally fixes
the effectiveness of the judgment and avoids problems such as
have arisen in this case and those cited in the following
paragraph. See Schaefer, 113 S.Ct. at 2632 (citing United States
v. Indrelunas, 411 U.S. 216, 220 (1973) (per curiam)).
Because the March 2 remand order was a judgment, see
Schaefer 113 S.Ct. at 2632, a separate document of judgment
should have been entered. Here, as in Schaefer, the district
court entered the remand order but did not enter a separate Rule
58 judgment. Thus, absent a formal judgment, the district
court's remand order remained appealable at the time Kadelski
filed his application for EAJA fees, and therefore his
application was timely under § 2412(d). Schaefer, 113 S.Ct. at
2632; see also Newsome v. Shalala, 8 F.3d 775 (11th Cir. 1993);
Curtis v. Shalala, 12 F.3d 97, (7th Cir. 1993); Gray v. Secretary
of Health and Human Services, 3 F.3d 1584 (9th Cir. 1993);
Freeman v. Shalala, 2 F.3d 552 (5th Cir. 1993).
The Secretary argues vigorously that, notwithstanding
Schaefer, Rule 58 was complied with in the present case. The
Secretary cites to a number of cases that hold that an order
adopting a magistrate judge's Report and Recommendation satisfies
Rule 58. See Mason v. Groose, 942 F.2d 515, 516 (8th Cir. 1991),
cert. denied, 112 S.Ct. 891 (1992) (order adopting Magistrate's
report and recommendation satisfies Rule 58); Laidley v. McClain,
7
914 F.2d 1386, 1390 (10th Cir. 1990) (same); Alman v. Taunton
Sportswear Mfg. Corp., 857 F.2d 840, 843 (1st Cir. 1988) (same),
cert. denied, 109 S.Ct. 1173 (1989); United States v. Perez, 736
F.2d 236, 238 (5th Cir. 1984) (same). These cases, however, were
all decided prior to the Supreme Court's decision in Schaefer,
which involved a remand order precisely similar to this case
adopting the Report and Recommendation of a magistrate judge,3
and in which the Court held that order does not satisfy Rule 58
unless a separate document of judgment is entered. Thus, they
are no longer controlling in light of Schaefer.
Moreover, contrary to the Secretary's contention, the
clerk of court's notation on the docket that the case was closed
is not determinative. The clerk did not mark the case closed
pursuant to an order entered by the court; rather, the clerk
followed an internal office procedure that whenever a case is
remanded, the clerk marks the case closed on the docket sheet.
The same case closed notation also appeared on the docket sheet
in Schaefer and the court did not find the notation instructive.
III.
Accordingly, we hold that a judgment of a district
court remanding a case to an administrative agency remains
appealable unless a separate document formally setting forth the
judgment is entered in accordance with Federal Rule of Civil
Procedure 58. Therefore, the judgment of the district court
denying Kadelski's motion for attorney's fees will be vacated and
3
See Newsome, 8 F.3d 779 n.19 (quoting Sullivan v. Schaefer
Petition for Writ of Certiorari, Appendix E).
8
the case remanded to the district court to enter judgment in
accordance with Rule 58 and for such other proceedings as are
consistent with the opinion, including consideration whether the
Government's position was substantially justified as provided by
the EAJA.
Costs taxed against the appellee.
9