Hope Kerr v. Comm'r of Soc. Sec. , 874 F.3d 926 ( 2017 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 17a0248p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
HOPE KERR, for Hank W. Kerr, Deceased, ┐
Plaintiff-Appellant, │
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> No. 16-6673
v. │
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COMMISSIONER OF SOCIAL SECURITY, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Western District of Kentucky at Louisville.
No. 3:15-cv-00313—
Argued: June 15, 2017
Decided and Filed: November 1, 2017
Before: NORRIS, MOORE, and STRANCH, Circuit Judges.
_________________
COUNSEL
ARGUED: Mahesha P. Subbaraman, SUBBARAMAN PLLC, Minneapolis, Minnesota, for
Appellant. Michael Jason Scoggins, SOCIAL SECURITY ADMINISTRATION, Chicago,
Illinois, for Appellee. ON BRIEF: Mahesha P. Subbaraman, SUBBARAMAN PLLC,
Minneapolis, Minnesota, Gregory T. Marks, GREG MARKS, P.S.C., Louisville, Kentucky, for
Appellant. Meghan O’Callaghan, SOCIAL SECURITY ADMINISTRATION, Chicago, Illinois,
for Appellee.
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. Plaintiff-Appellant Hope Kerr (on behalf of
her deceased husband Hank W. Kerr) appeals the judgment of a United States Magistrate Judge
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 2
denying as moot her motion under Federal Rule of Civil Procedure 59(e). In April 2015, Kerr
sought judicial review of the final decision of the Acting Commissioner of the Social Security
Administration (“Commissioner”) that Mr. Kerr was not entitled to disability benefits prior to his
death. After the district court granted a joint motion to remand for further administrative
proceedings, Kerr moved for attorney fees under the Equal Access to Justice Act (“EAJA”).
Kerr specifically requested that any fee award be made payable directly to her attorney pursuant
to an assignment between Kerr and the attorney. The district court concluded that it could not
award fees directly to Kerr’s lawyer because it concluded that the fee assignment violated the
Anti-Assignment Act (“AAA”). Kerr subsequently filed a motion to amend or alter the district
court’s judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure requesting that
the court reverse the application of the AAA to her assignment with her lawyer, honor the fee
award assignment, and order payment of the fees directly to Kerr’s counsel. Before the district
court could rule on the Rule 59(e) motion, the Commissioner paid the fee award to Kerr’s
counsel. The district court subsequently denied as moot Kerr’s Rule 59(e) motion. For the
reasons stated below, we AFFIRM the district court’s judgment.
I. BACKGROUND
On April 27, 2015, Hope Kerr filed a civil action seeking judicial review of the final
determination of the Acting Commissioner of the Social Security Administration that Kerr’s
husband was not disabled and therefore not entitled to any disability insurance benefits prior to
the time of his death. R. 1 (Compl. at 1) (Page ID #1). Because Kerr was living with her
husband at the time of his death, she was due to receive any payment owed to Mr. Kerr and was
a proper substitute party for Mr. Kerr in any proceedings before the Social Security
Administration. 20 C.F.R. §§ 404.503(b)(1), 416.542(b)(1).
The parties consented to have the case heard by a United States Magistrate Judge. R. 11
(Consent Order at 1) (Page ID #617). The Commissioner did not oppose Kerr’s request for a
remand and the parties stipulated to reversal and remand of the Commissioner’s decision
pursuant to 42 U.S.C. § 405(g). R. 20 (Order at 1) (Page ID #652). Subsequent to the remand,
Kerr moved in the district court for an award of $3,206.25 in attorney fees pursuant to the Equal
Access to Justice Act. R. 22 (Fee Mot. at 2) (Page ID #656); 28 U.S.C. § 2412(d). Kerr
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 3
specifically requested that any fees awarded “be made payable to Plaintiff’s counsel . . . .” Id.Kerr attached to her motion an “Affidavit and Assignment of EAJA Fee,” that was signed on
March 23, 2016. R. 23 (EAJA Assignment) (Page ID #661–62). The assignment document
stated that, “I assign any right or interest I may have in the award of an EAJA fee and understand
that the EAJA award shall be paid to my attorney, Greg Marks, to compensate counsel for the
work performed on this case in the U.S. District Court.” Id. Kerr specifically “ask[ed] that the
EAJA award be made payable to Greg Marks and not to me as Plaintiff.” Id. at Page ID #661.
The Commissioner responded to Kerr’s EAJA fee motion by stating that she “does not oppose
[Kerr’s] motion for attorney fees in the amount of $3,206.25,” and that “[a]fter the Court enters
the above award, if . . . [Kerr] owes no pre-existing debt subject to offset,” then the
Commissioner would “direct that the award be made payable to [Kerr’s] attorney pursuant to the
EAJA assignment duly signed by [Kerr].” R. 24 (Comm’r Resp. at 1) (Page ID #663).
On April 29, 2016, the district court granted Kerr’s motion for attorney fees in the
amount of $3,206.25. R. 25 (Order at 3) (Page ID #669). The district court declined to honor
Kerr’s assignment and concluded that it was required to order payment of the award to Kerr as
the prevailing party. Id. Specifically, the district court concluded that it could not “ignore the
Anti-Assignment Act,” which prohibits “an assignment of a claim against the United States that
is executed before the claim is allowed, before the amount of the claim is decided, and before a
warrant for payment of the claim has been issued.” Id. at 4 (Page ID #670) (internal quotation
marks omitted). After sua sponte invoking the AAA, the district court noted that “[w]hile the
Sixth Circuit has not directly spoken on this issue, district courts within the Sixth Circuit have
agreed that any assignment of an EAJA award that predates the actual award of fees is void.” Id.(internal quotation marks omitted). The district court therefore declared Kerr’s assignment of
her EAJA award to her counsel void because “the assignment predate[d] the [district court’s]
award of fees.” Id. at 5 (Page ID #671). Finally, the district court “le[ft] it to the
Commissioner’s discretion to determine whether to waive the Anti-Assignment Act and make
the fee payable to Mr. Marks.” Id. at 6 (Page ID #672).
Kerr responded to the district court’s order by filing a motion pursuant to Federal Rule of
Civil Procedure 59(e) seeking: (1) to “reverse the [district court’s] application of the Anti-
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 4
Assignment Act”; and (2) to issue an order requiring payment of the fee award directly to Kerr’s
counsel. R. 26 (Mot. at 25) (Page ID #698). The Commissioner responded that she would
“exercis[e] her discretion to accept [Kerr’s] assignment” and “make the EAJA award payable to
counsel.” R. 27 (Response at 1) (Page ID #760). The Commissioner further suggested that the
district court should deny as moot the Rule 59(e) motion because the Commissioner had
“deci[ded] to waive compliance with the [Anti-Assignment Act], [and] granting [Kerr’s] motion
would not provide h[er] with any additional relief.” Id. at 1–2 (Page ID #760–61). Additionally,
the Commissioner argued that “[w]hether the Anti-Assignment Act (AAA) applies to the
assignment of EAJA fees would only be relevant to the outcome of this matter if the
Commissioner declined to waive the AAA in this particular case.” Id. at 760. Kerr filed a reply
to the Commissioner’s response and argued that: (1) the district court incorrectly ruled that the
AAA applied in EAJA cases; and (2) Kerr’s rule 59(e) motion was not moot in light of the
“capable of repetition yet evading review” and “voluntary cessation” exceptions to mootness. R.
28 (Reply at 4) (Page ID #767).
On October 17, 2016, the district court issued a memorandum opinion and order denying
as moot Kerr’s motion to amend pursuant to Rule 59(e). The district court concluded that “Kerr
asked for the award to be made payable to counsel. The Commissioner made the award payable
to counsel.” R. 29 (Rule 59(e) Order at 2) (Page ID #773). Because the district court concluded
that Kerr’s motion was moot, it did “not consider whether it clearly erred in the previous
memorandum opinion and order [applying the AAA to the EAJA fee assignment].” Id.Kerr now appeals and argues that: (1) the district court erred in holding that Kerr’s
motion under Federal Rule of Civil Procedure 59(e) was moot; (2) this court should decide the
pure legal issues raised by Kerr’s Rule 59(e) motion; (3) the Anti-Assignment Act does not apply
to client-to-counsel assignments of judicial EAJA fee awards in Social Security cases; and
(4) the Commissioner of Social Security must honor client-to-counsel assignments of judicial
EAJA fee awards. For the reasons that follow, we affirm the district court’s judgment.
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 5
II. ANALYSIS
A. Standard of Review
“We review de novo a district court’s decision regarding mootness.” Cleveland Branch,
NAACP v. City of Parma, 263 F.3d 513, 530 (6th Cir. 2001). We also review de novo a district
court’s decision regarding an issue of statutory interpretation pursuant to the Equal Access to
Justice Act. Bryant v. Comm’r of Soc. Sec., 578 F.3d 443, 445 (6th Cir. 2009). “We review a
district court’s decision to exercise jurisdiction over a declaratory judgment action for abuse of
discretion.” Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 554 (6th Cir. 2008). Finally, we
review for abuse of discretion a district court’s denial of a Rule 59(e) motion. Intera Corp. v.
Henderson, 428 F.3d 605, 619 (6th Cir. 2005).
B. Kerr’s Rule 59(e) Motion Is Not Moot
Kerr first argues that the district court erred in denying as moot her Rule 59(e) motion to
alter or amend the judgment awarding fees to Kerr (and not directly to her lawyer) because:
(1) the Commissioner had the burden to prove mootness; (2) the Commissioner’s waiver of the
Anti-Assignment Act was a waiver of a power she did not have; (3) Kerr and her counsel
retained a concrete interest in their property right to engage in EAJA award assignments that was
impaired by the district court’s previous order; and (4) the mootness exceptions of capable of
repetition yet evading review and voluntary cessation apply.
The district court concluded “that the motion to alter or amend is moot. Kerr asked for
the award to be made payable to counsel. The Commissioner made the award payable to
counsel.” R. 29 (Op. at 2) (Page ID #773). The district court rejected Kerr’s argument that the
capable of repetition yet evading review exception applies because “Kerr has not shown that
cases presenting this fact pattern have been evading review. Indeed, it is likely that a claimant
who receives an award payable to the claimant but subject to the government’s set-off could, and
would, challenge the Anti-Assignment Act’s application.” Id. The court similarly concluded
that Kerr failed to show “that the Commissioner’s compliance with this Court’s order, by making
the award payable to the attorney, was a voluntary cessation of a challenged practice.” Id.No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 6
Article III of the United States Constitution limits the power of the federal courts to
“Cases” and “Controversies.” U.S. Const. Art. III, § 2. “The ‘case-or-controversy requirement
subsists through all stages of federal judicial proceedings.’” Chafin v. Chafin, 568 U.S. 165, 172
(2013) (quoting Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990)). A federal court “lacks
jurisdiction to consider any case or issue that has lost its character as a present, live controversy
and thereby becomes moot.” Demis v. Sniezek, 558 F.3d 508, 512 (6th Cir. 2009) (quotation
marks omitted). “Simply stated, a case is moot when the issues presented are no longer ‘live’ or
the parties lack a legally cognizable interest in the outcome.” Id. (quoting Int’l Union v. Dana
Corp., 697 F.2d 718, 720–21 (6th Cir. 1983)). Therefore, “[i]f an intervening circumstance
deprives the plaintiff of a personal stake in the outcome of the lawsuit, at any point during the
litigation, the action can no longer proceed and must be dismissed as moot.” Campbell-Ewald
Co. v. Gomez, 136 S. Ct. 663, 669 (2016) (quoting Genesis Healthcare Corp. v. Symczyk,
569 U.S. 66, 72 (2013)). We have recognized that “a case becomes moot only when subsequent
events make it absolutely clear that the allegedly wrongful behavior cannot reasonably be
expected to recur and interim relief or events have completely and irrevocably eradicated the
effects of the alleged violation.” Cleveland Branch, NAACP v. City of Parma, 263 F.3d 513,
530–31 (6th Cir. 2001) (quotation marks omitted). It is always the case that “[t]he heavy burden
of demonstrating mootness rests on the party claiming mootness.” Id.Any claimant may obtain review of a final decision of the Commissioner by filing a civil
action in the district court, pursuant to 42 U.S.C. § 405(g). Sentence four of § 405(g) provides
that the district court may “enter . . . a judgment affirming, modifying, or reversing the decision
of the Commissioner of Social Security, with or without remanding the cause for a rehearing,”
which we have referred to as a “sentence-four remand.” Turner v. Comm’r of Soc. Sec.,
680 F.3d 721, 723 (6th Cir. 2012). “On sentence-four remand, the administrative law judge
retains the discretion to grant or deny a benefits award.” Id. (citing Shalala v. Schaefer, 509 U.S.
292, 304 (1993) (Stevens, J., dissenting)). When a sentence-four remand is granted, the plaintiff
becomes the “prevailing party” under EAJA, which “entitle[s] the plaintiff to ‘fees and other
expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party
. . . .’” Id. (quoting 28 U.S.C. § 2412(d)(1)(A)). EAJA fees are not deducted from the claimant’s
benefit award and are instead awarded in excess of any benefits due (in contrast to attorney fees
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under 42 U.S.C. § 406(b), which are deducted from the claimant’s final award). Id. “Fees are
paid directly to the claimant, Bryant v. Comm’r of Soc. Sec., 578 F.3d 443, 449 (6th Cir. 2009),
unless the claimant preemptively assigns the fee award to counsel.” Id. (citation omitted). The
Supreme Court has held that “a § 2412(d) fees award is payable to the litigant and is therefore
subject to a Government offset to satisfy a pre-existing debt that the litigant owes to the United
States.” Astrue v. Ratliff, 560 U.S. 586, 589 (2010). Because “EAJA does not legally obligate
the Government to pay a prevailing litigant’s attorney . . . the litigant’s obligation to pay her
attorney is controlled . . . by contract and the law governing that contract.” Id. at 599(Sotomayor, J. concurring). Whether EAJA awards must be paid to attorneys or prevailing
parties and whether the Anti-Assignment Act applies in the EAJA context are important legal
issues because “[t]he EAJA’s admirable purpose will be undercut if lawyers fear that they will
never actually receive attorney’s fees to which a court has determined the prevailing party is
entitled.” Id. at 600.
Kerr argues that although the Commissioner waived application of the AAA to Kerr’s
EAJA award, doing so “put the cart before the horse.” Appellant Br. at 16. Kerr suggests that
“[f]or the Commissioner to argue that her discretionary decision to waive the Anti-Assignment
Act completely mooted Kerr’s Rule 59(e) Motion, the Commissioner first had to demonstrate
that she could enforce the Act against Kerr’s assignment.” Id. at 16–17. Although the
Commissioner eventually paid Kerr’s lawyer directly, Kerr argues that there still existed a live
controversy regarding the application of the AAA to EAJA fee awards, and that Kerr and her
counsel retained a concrete interest in the outcome of [her] Rule 59(e) motion: “an unimpaired
property right to engage in EAJA award assignments.” Appellant Br. at 18.
We disagree that Kerr and her lawyer were deprived of a property right to engage in
attorney fee assignments, and that the alleged deprivation meant that a live controversy still
existed. Kerr sought payment of her EAJA fee award directly to her lawyer, and by the time the
district court acted on Kerr’s Rule 59(e) motion, the Commissioner had paid the requested EAJA
fee award directly to Kerr’s lawyer. We conclude that the Commissioner’s action of paying the
EAJA fee award directly to Kerr’s lawyer would have, in the normal course, mooted this case.
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 8
Kerr argues that even if the Commissioner’s action of waiving the AAA mooted her case,
we should still exercise jurisdiction because the Commissioner’s actions are capable of repetition
yet evading review. We agree. “[A] case will not be considered moot if it the challenged
activity is capable of repetition, yet evading review.” Kentucky v. U.S. ex rel. Hagel, 759 F.3d
588, 595 (6th Cir. 2014) (quoting Lawrence v. Blackwell, 430 F.3d 368, 371 (6th Cir. 2005)).
“For this exception to apply, ‘a challenged action must satisfy two requirements. First, it must
be too short in duration to be fully litigated before it ceases. Second, there must be a reasonable
expectation that the same parties will be subjected to the same action again.’” Wilson v. Gordon,
822 F.3d 934, 951 (6th Cir. 2016) (quoting Appalachian Reg’l Healthcare, Inc. v. Coventry
Health & Life Ins. Co., 714 F.3d 424, 430 (6th Cir. 2013)).
The “capable of repetition yet evading review” exception applies in this case because the
challenged action (the Commissioner interpreting the AAA as applying in the EAJA fee context
yet agreeing to waive the AAA subject to administrative offset) is too short in duration to be
fully litigated before it ceases. Kerr’s attorney fee assignment was signed on March 23, 2016.
The motion for attorney fees was granted on April 29, 2016, and the Commissioner informed the
district court of her intention to honor the attorney fee assignment and waive application of the
AAA on June 16, 2016. R. 27 (Comm’r Resp. at 1) (Page ID #760). The case was not even
docketed in this court until November 16, 2016, and the briefing was not complete until March
17, 2017. The nearly three-month period between the time the assignment was executed and the
time the Commissioner determined both that the AAA applied and that she would waive
application of the AAA is far too short in duration to be fully litigated. We also conclude that
Kerr has met the second element of the “capable of repetition yet evading review” test because
there is a reasonable expectation that these same parties will be subjected to this same action in
the future. As Kerr rightly notes, “there is a more-than-reasonable likelihood that Kerr and her
counsel will benefit from judicial review given that Kerr’s case is still ongoing and Kerr’s
counsel—a Social Security lawyer for over 20 years—has received EAJA awards in many
cases.” Appellant Br. at 24. Because the Commissioner’s action of interpreting and then
waiving the AAA is capable of repetition yet evading review, we conclude that this case is not
moot.
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 9
C. Kerr’s Purely Legal Claim Is Properly Before This Court
Now that we have concluded that Kerr’s case is not moot, the question falls to us to
decide whether we should return this case to the district court for resolution of the merits issues.
There is certainly a persuasive argument that district courts should take the first pass at the
thorny, complex, and important legal issues presented in these types of cases. On the other hand,
principles of judicial economy suggest that appellate courts should consider purely legal issues
where those issues are all but certain to dictate the outcome of the litigation. Kerr argues that we
should “decide the pure legal issues raised by Kerr’s Rule 59(e) [m]otion as a matter of judicial
economy.” Appellant Br. at 28. Kerr believes that we are best situated to address her legal
issues “because: (1) the merits concern pure questions of law that do not require any fact-finding
to resolve; (2) the merits are capable of clear resolution; and (3) remand would only entail further
needless delay.” Id.Although it is generally true that “an appellate court may not consider an issue not
addressed below,” we have previously held that “[t]his court will decide an issue a lower court
does not reach if the issue is a purely legal one or if doing so is in the interest of judicial
economy.” Davis v. Lifetime Capital, Inc., 560 F. App’x 477, 494–95 (6th Cir. 2014) (citing
Lindsay v. Yates, 498 F.3d 434, 441 (6th Cir. 2007)). In cases that do “not necessitate any
findings of fact, the district judges’ expertise in evaluating factual matters cannot advance our
appellate review.” Hadix v. Johnson, 144 F.3d 925, 935 (6th Cir. 1998), abrogated on other
grounds by Miller v. French, 530 U.S. 327 (2000).
We have no doubt that the district court could capably and ably address the legal issue
regarding the propriety of issuing a declaratory judgment in this case. However, we conclude
that this is the exact type of issue that can and should be decided by the appellate court in the
first instance. Kerr has presented us with two purely legal issues: “First, does the Anti-
Assignment Act reach client-to-counsel assignments of judicial EAJA fee awards in Social
Security cases,” and, “[s]econd, if the Anti-Assignment Act doesn’t apply, does an otherwise
valid client-to-counsel assignment of a judicial EAJA fee award in a Social Security case require
the Commissioner to pay this award directly to counsel?” Appellant Br. at 29. Whether to issue
a declaratory judgment on these two questions about the applicability of the Anti-Assignment
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Act to Social Security fee-assignment cases is a purely legal issue that we may appropriately
adjudicate at this stage in the litigation. We also conclude that it is appropriate to address Kerr’s
legal issues on appeal because: (1) our answer to these legal questions is integral to the outcome
of this litigation and others; (2) the issues have been clearly and thoroughly briefed and argued
before us and are therefore capable of clear resolution; and (3) remand would not be in the
interest of judicial economy because either party would almost certainly appeal an adverse
decision by the district court and we would eventually be called upon to address these very
issues. We therefore conclude that it is both prudent and in the interests of judicial economy to
reach the merits of Kerr’s legal issues.
D. The District Court Correctly Concluded that EAJA Fee Awards Are Paid To Parties,
Not Counsel
Kerr argues on the merits that the district court erred in voiding her EAJA attorney fee
assignment under the AAA, and asks us to declare that the AAA cannot void EAJA fee
assignments. We believe that this issue has already been considered and decided by both this
court and the Supreme Court, and for the reasons that follow, we affirm the district court’s
judgment that EAJA fee awards are made payable to the prevailing party, not the prevailing
party’s lawyer.
The district court invoked the AAA sua sponte because it concluded that it could not
“ignore the Anti-Assignment Act.” R. 25 (Order at 4) (Page ID #670). The district court
concluded that “[u]nder the Anti-Assignment Act, 31 U.S.C. § 3727, an assignment of a claim
against the United States that is executed before the claim is allowed, before the amount of the
claim is decided, and before a warrant for payment of the claim has been issued is void.” Id.(quoting 31 U.S.C. § 3727(b)). The district court conceded that this is an issue of first
impression before this court, and noted that “[w]hile the Sixth Circuit has not directly spoken on
this issue, district courts within the Sixth Circuit have agreed that any assignment of an EAJA
award that predates the actual award of fees is void.” Id. After concluding that Kerr’s
assignment of her fee award to her counsel predated the court’s award of fees pursuant to EAJA,
the district court concluded that the assignment “appears to be void.” Id. at 5 (Page ID #671).
The district court noted, however, that “while it is obligated to award fees directly to Kerr, it
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 11
appears that nothing prevents the Commissioner from waiving application of the Anti-
Assignment Act and making the award payable to Mr. Marks should the Commissioner verify
that Kerr owes no pre-existing debt to the United States Government.” Id. The district court
thus decided to “leave it to the Commissioner’s discretion to determine whether to waive the
Anti-Assignment Act and make the fee payable to Mr. Marks.” Id. at 6 (Page ID #672).
1. The Anti-Assignment Act
The Anti-Assignment Act provides that “a transfer or assignment of any part of a claim
against the United States Government or of an interest in the claim . . . may be made only after a
claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has
been issued.” 31 U.S.C. § 3727(a)(1), (b). Congress enacted the AAA as a means “to prevent
persons of influence from buying up claims against the United States, which might then be
improperly urged upon officers of the Government.” United States v. Aetna Cas. & Sur. Co.,
338 U.S. 366, 373 (1949). “In effect, the [Anti-Assignment Act] serves as a defense that the
Government can raise against a claim.” Murkeldove v. Astrue, 635 F.3d 784, 794 (5th Cir.
2011). However, “[i]t is well established . . . that the Government can waive coverage of the
Anti-Assignment Acts.” Riviera Fin. of Tex., Inc. v. United States, 58 Fed. Cl. 528, 530 (Fed.
Cl. 2003). The AAA “must be interpreted in the light of its purpose to give protection to the
Government . . . . [A]ssignments may be heeded, at all events in equity, if they will not frustrate
the ends to which the prohibition was directed.” Martin v. Nat’l Sur. Co., 300 U.S. 588, 596–97
(1937).
2. Astrue v. Ratliff Governs This Case
In Astrue v. Ratliff, 560 U.S. 586 (2010), the Supreme Court resolved a challenge to
Section 204(d) of EAJA, 28 U.S.C. § 2412(d), which provides that “a court shall award to a
prevailing party . . . fees and other expenses . . . 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.” The Court held “that a § 2412(d) fees award is payable to the litigant and is therefore
subject to a Government offset to satisfy a pre-existing debt that the litigant owes to the United
States.” Ratliff, 560 U.S. at 589. The plaintiff in Ratliff prevailed in her Social Security benefits
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 12
action, and the district court granted plaintiff’s unopposed motion for attorney fees. Id. Before
paying the fee award, the United States sought an administrative offset to cover a debt that the
plaintiff had previously owed to the government. Id. The plaintiff’s lawyer “intervened to
challenge the offset on the grounds that Section 2412(d) fees belong to a litigant’s attorney and
thus may not be used to offset or otherwise satisfy a litigant’s federal debts.” Id. at 590.
The Court concluded that “[t]he fact that the statute awards to the prevailing party fees in
which her attorney may have a beneficial interest or a contractual right does not establish that the
state ‘awards’ the fees directly to the attorney,” because “it ‘awards’ the fees to the litigant, and
thus subjects them to a federal administrative offset if the litigant has outstanding federal debts.”
Id. at 593. Citing 42 U.S.C. § 406(b)(1)(A), the Court noted that although the Social Security
Act makes standard attorney Social Security fee awards payable directly to the prevailing
claimant’s attorney, “the absence of such language in subsection [2412](d)(1)(A),” made the
Court “reluctant to interpret the latter [EAJA] fee provision to contain a direct fee requirement
absent clear textual evidence supporting such an interpretation.” Id. at 595. Justice Sotomayor
concurred, noting that “[t]he EAJA does not legally obligate the Government to pay a prevailing
litigant’s attorney, and the litigant’s obligation to pay her attorney is controlled not by the EAJA
but by contract and the law governing that contract.” Id. at 599.
It is clear after Ratliff that attorney fees ordered under EAJA are to be paid to the
prevailing party. Not only does Ratliff control here in that it compels us to affirm the district
court’s award of fees to Kerr, but it also impliedly affirms the district court’s decision to void the
EAJA fee award assignment. Although the Court never mentioned the AAA, it was undoubtedly
aware of the prevalence of attorney fee assignments. See Ratliff, 560 U.S. at 597 (noting that the
Commissioner “most often paid EAJA fees directly to attorneys in cases in which the prevailing
party had assigned its rights in the fees award to the attorney (which assignment would not be
necessary if the statute rendered the fees award payable to the attorney in the first instance).”).
We therefore conclude that although Kerr had the right to assign her EAJA fee award to her
lawyer, the award itself was payable to Kerr and the Commissioner had discretion either to honor
or not to honor the assignment.
No. 16-6673 Kerr v. Comm’r of Soc. Sec. Page 13
3. Hobbs v. McLean Does Not Dictate The Outcome Of This Case
Kerr urges us to decide this case based on Hobbs v. McLean, 117 U.S. 567 (1886), a case
that applied the Anti-Assignment Act to a private partnership agreement. The Hobbs Court, in
discussing the Anti-Assignment Act’s application to claims against the United States noted that,
“[w]hat is a claim against the United States is well understood. It is a right to demand money
from the United States.” Id. at 575. The AAA, the Court concluded, “only refers to claims
against the United States which can be presented by the claimant to some department or officer
of the United States for payment, or may be prosecuted in the Court of Claims.” Id. Kerr further
argues that after Hobbs, “the Anti-Assignment Act cannot be said to reach client-to-counsel
assignments of judicial EAJA fee awards in Social Security cases . . . because claims for these
specific awards can neither be: (1) ‘presented by the claimant to some department or officer of
the United States for payment’; nor (2) ‘prosecuted in the Court of Claims.’” Appellant Br. at 38
(quoting Hobbs, 117 U.S. at 575). Kerr argues that because EAJA claims must be presented to a
judge and not an officer of the United States and because they cannot be presented in the U.S.
Court of Federal Claims, such claims fail the Hobbs test.
Although we appreciate Kerr’s logical, forceful, and creative argument, we disagree. We
understand Hobbs to stand only for the proposition that an assignment between two private
parties may be enforceable as to the parties and at the same time not enforceable against the
United States. We therefore conclude that claims for attorney fees under EAJA are “claims
against the United States” because “[a]n award of statutory attorney’s fees is, at base, a right to
demand money from the United States. Given the broad construction we are required to give the
Anti-Assignment Act, we see no reason to place statutory attorney’s fees awards beyond the
reach of the Act.” United States v. Kim, 806 F.3d 1161, 1171 (9th Cir. 2015).
4. Bryant v. Commissioner of Social Security Is Dispositive
One year before Ratliff, in Bryant v. Commissioner of Social Security, we held “that the
prevailing party, and not her attorney, is the proper recipient of attorney fees under the EAJA.”
578 F.3d 443, 448 (6th Cir. 2009). In Bryant, two separate plaintiffs succeed in the district court
in having their Social Security disability benefits cases remanded to the Commissioner. Id. at
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445. The plaintiffs then moved for attorney fee awards under EAJA and requested that payment
be made directly to their counsel. Id. The Commissioner argued that the fees should be paid to
the plaintiffs and not to their lawyers, and the district court agreed. On appeal, we noted that
“the EAJA specifically states that a fee application must demonstrate that ‘the party’—not the
party’s attorney—is both a ‘prevailing party’ and is financially ‘eligible to receive an [EAJA]
award.’” Id. at 448 (quoting 28 U.S.C. § 2412(d)(1)(B)). We also explained, as the Supreme
Court later did in Ratliff, that “[i]f Congress had intended for EAJA fees to be awarded to the
party’s attorney, it could have explicitly done so.” Id. (discussing § 406(b) of the Social Security
Act, which provides for direct payment of attorney fees to the attorney out of the total amount of
the award).
After Bryant and Ratliff, it is clear that the district court correctly concluded that the
attorney award in this EAJA case was due to Kerr as the prevailing party. Whether the AAA can
apply to void an assignment of EAJA fees was discussed three years after Bryant, in Turner v.
Commissioner of Social Security, 680 F.3d 721 (6th Cir. 2012).
5. Turner v. Commissioner of Social Security Is Dispositive
Turner, like this case, was an EAJA attorney fee case involving a sentence-four remand.
Turner, 680 F.3d at 722. The plaintiff in Turner signed a representation agreement with his
lawyer that, inter alia, “assigned to [the lawyer] any fees that the court may award Turner under
the EAJA.” Id. Upon being initially denied benefits by the Commissioner, Turner was
successful in having his case remanded pursuant to sentence four of 42 U.S.C § 405(g). Id.
Turner then filed a motion for attorney fees pursuant to EAJA, and the district court denied the
motion. Id. In holding that the plaintiffs, and not their lawyers, were entitled to EAJA fee
awards, we noted that “Fees are paid directly to the claimant, unless the claimant preemptively
assigns the fee award to counsel.” Id. at 723 (citation omitted). With respect to whether the
AAA can apply in the context of an assignment of an EAJA fee award following a sentence-four
remand, we said “[l]itigants may retain fee awards only if the assignment provision becomes
void, usually because the government requests that the court void the provision under the AAA.”
Id. at 725 (citing Murkeldove, 635 F.3d at 794). We explicitly contemplated that the AAA could
serve as a bar to an EAJA fee award assignment in Turner, and we conclude today that the
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district court did not err in concluding that the AAA could bar Kerr’s assignment to her lawyer in
this case.
6. United States v. Kim Is Instructive
In Kim, the defendant and members of his family prevailed against government attempts
to forfeit certain property seized in relation to a criminal investigation. 806 F.3d at 1164. Kim
subsequently received several awards of attorney fees. Id. Kim’s lawyer then asked that the
district court pay the attorney fees directly to the lawyer, pursuant to an assignment between Kim
and his counsel. Id. at 1164–65. The government raised the AAA as a defense, and argued that
the AAA voided the assignment. The Ninth Circuit held that the Anti-Assignment Act could be
applied to an assignment of attorney’s fees under the Civil Asset Forfeiture Reform Act
(“CAFRA”). Id. The court concluded that “the Anti-Assignment Act invalidates an assignment
of an award of statutory attorney’s fees against the United States from the claimant to his
attorney. However, the Anti-Assignment Act goes no further. The Act does not prevent an
attorney from taking an interest in the fees that is effective against the Government; it merely
forbids an assignment of the right to be paid directly from the United States Treasury.” Id. The
court further concluded that “it is all but impossible for any assignment to comply with the
strictures of the Anti-Assignment Act, because the Treasury no longer uses warrants,” but
acknowledged that “[i]t is well established . . . that the Government can waive coverage of the
Anti-Assignment Acts.” Id. at 1169 (quotation marks omitted). Finally, the court determined
that the CAFRA fee award is a claim against the United States, that the fees belong to the client,
and that the attorney retains an interest in the fee award.
We conclude that the Ninth Circuit’s approach to the AAA in CAFRA cases can and
should apply to the AAA in EAJA cases. We agree that a fee award under EAJA is “a right to
demand money from the United States.” Kim, 806 F.3d at 1171. Unless the government waives
application of the AAA in EAJA cases, fee awards must be paid to the prevailing party, not to
the party’s lawyer.
Finally, we believe that our conclusion today is consistent with the purposes of the AAA,
one of which is “to save to the United States ‘defenses which it has to claims by an assignor by
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way of set-off, counter claim, etc., which might not be applicable to an assignee.’” United States
v. Shannon, 342 U.S. 288, 291–92 (1952) (citation omitted). We understand and share Justice
Sotomayor’s concern that “[t]he EAJA’s admirable purpose will be undercut if lawyers fear that
they will never actually receive attorney fees to which a court has determined the prevailing
party is entitled.” Ratliff, 560 U.S. at 600 (Sotomayor, J. concurring). And, as we stated in
Bryant, “awarding attorney fees to successful parties, rather than to their attorneys, will prevent
some successful plaintiffs from paying their lawyers, and ultimately, may prevent future
claimants from obtaining counsel in the first place.” Bryant, 578 F.3d at 445. However, our
conclusion today is consistent with our Circuit precedent, Supreme Court precedent, and the
statutory scheme of EAJA.
III. CONCLUSION
EAJA is an important tool for lawyers who seek to provide legal services to clients who
might otherwise not be able to afford those services. In this case, the district court’s conclusion
that the dispute was moot was in error because the Commissioner’s action of asserting and then
waiving the AAA is capable of repetition yet evading review. We conclude that remand is not
necessary because we have addressed the purely legal issues involved with this appeal.
Therefore, for the reasons explained above, we AFFIRM the district court’s judgment.