Smith v. McDonough ( 2021 )

Case: 20-1354 Document: 78 Page: 1 Filed: 04/29/2021
United States Court of Appeals
for the Federal Circuit
______________________
ROBERT L. SMITH,
Claimant-Appellant
v.
DENIS MCDONOUGH, SECRETARY OF
VETERANS AFFAIRS,
Respondent-Appellee
______________________
2020-1354
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 17-4391, Judge Amanda L. Mere-
dith.
______________________
Decided: April 29, 2021
______________________
RACHEL BAYEFSKY, Akin Gump Strauss Hauer & Feld
LLP, Washington, DC, argued for claimant-appellant.
Also represented by Z.W. JULIUS CHEN, PRATIK A. SHAH;
JOSHUA DAVID TATE, Los Angeles, CA; MEGHAN GENTILE,
HAROLD HAMILTON HOFFMAN, III, Veterans Legal Advoca-
cy Group, Arlington, VA.
ROBERT R. KIEPURA, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for respondent-appellee. Also
represented by JEFFREY B. CLARK, ELIZABETH MARIE
Case: 20-1354 Document: 78 Page: 2 Filed: 04/29/2021
2 SMITH v. MCDONOUGH
HOSFORD, ROBERT EDWARD KIRSCHMAN, JR.; MEGHAN
ALPHONSO, BRIAN D. GRIFFIN, Office of General Counsel,
United States Department of Veterans Affairs, Washing-
ton, DC.
ALLISON ZIEVE, Public Citizen Litigation Group,
Washington, DC, for amici curiae Judge David L. Bazelon
Center for Mental Health Law, National Veterans Legal
Services Program, Public Citizen Foundation. Also repre-
sented by SCOTT L. NELSON.
______________________
Before PROST, Chief Judge, PLAGER and O’MALLEY, Circuit
Judges.
PLAGER, Circuit Judge.
This is a veterans case, presenting an important ques-
tion of proper compensation under the Equal Access to
Justice Act (“EAJA”), codified in relevant part at 28
U.S.C. § 2412. Under the EAJA’s fee-shifting provisions,
the Federal Government, if the statutory requirements
are met, must reimburse attorneys’ fees of a party who
prevails in a lawsuit against the Government.
In this case, veteran Robert L. Smith was dissatisfied
with the decision of the Department of Veterans Affairs
regarding his claims for veterans’ benefits. He took an
appeal to the Court of Appeals for Veterans Claims (“Vet-
erans Court”), an Article I tribunal first created in 1988
for reviewing final decisions of the Department of Veter-
ans Affairs. 1 There he obtained a victory on the merits in
part of his case against the Government. He then re-
quested of the court an EAJA award for his appellate
1 See generally Veterans’ Judicial Review Act of
1988, Pub. L. No. 100-687, 102 Stat. 4105 (1988).
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SMITH v. MCDONOUGH 3
counsel. The Veterans Court agreed to an award which
included time spent by the attorney in the initial review
of the record in the case. That time comprised 18 hours
spent on an initial review of the 9,389-page agency record.
The court, however, imposed a reduction in that part of
the award because the litigant prevailed on some but not
all of the issues that were litigated.
The Veterans Court was of the view that this reduc-
tion was required as a matter of law by the EAJA. As we
shall explain, this undervalued the importance of the
initial review of the case, a review that is necessary before
appellate counsel could determine what bases, if any,
existed for an appeal, and is contrary to the purpose and
law of the EAJA. Because the court erred in so conclud-
ing, we reverse-in-part, affirm-in-part, and remand the
matter to the Veterans Court for an award consistent
with this opinion.
BACKGROUND
Appellant Robert L. Smith served on active duty in
the U.S. Army for over twenty years, from February 1977
until November 1997, when he was honorably discharged.
Subsequently, Mr. Smith filed claims with the Depart-
ment of Veterans Affairs for veterans’ benefits regarding
various medical conditions he attributed to his military
service; except as noted, the specific details of these
conditions and claims are not relevant to the outcome in
the case before us.
After his various claims were acted upon by the initial
examining officials, with results not to his liking, Mr.
Smith took his case to the Board of Veterans’ Appeals, an
administrative appellate board within the Department of
Veterans Affairs (“VA”). In September 2017, that Board
issued a lengthy decision granting some of Mr. Smith’s
claims but denying others to varying degrees.
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4 SMITH v. MCDONOUGH
In November 2017, Mr. Smith appealed the Board’s
decision to the Veterans Court. Before that court, Mr.
Smith, now represented by attorneys, challenged the
Board’s decision with respect to seven of his denied bene-
fit claims.
In March 2019, the Veterans Court issued a decision
granting Mr. Smith relief with respect to one of the seven
claims—concerning a gastrointestinal disorder—but
upholding the Board’s adverse decisions with regard to
the other six claims appealed. The Veterans Court en-
tered judgment in April 2019.
In June 2019, Mr. Smith, having successfully pre-
vailed against the Government on at least one of his
claims, filed an EAJA application with the Veterans
Court for an award of attorneys’ fees. He sought a total of
$10,207.27 for 50.15 hours of attorney work and $89.36 in
expenses. As noted, the attorney work included 18 hours
of initial review of the record of the case—16.5 hours
reading and taking notes on an administrative record
consisting of 9,389 pages, and 1.5 hours on related mat-
ters.
In response to Mr. Smith’s application, the Govern-
ment conceded the three basic requirements for an EAJA
award: (1) that Mr. Smith was a prevailing party with
respect to the gastrointestinal disorder claim; (2) that the
VA’s contrary position was not substantially justified; and
(3) that no special circumstances made an award unjust.
However, the Government argued that the amount was
unreasonable because Mr. Smith only prevailed with
respect to one of the seven claims appealed.
In reply, Mr. Smith noted that he had already agreed
to various adjustments and had reduced his overall re-
quest from $10,207.27 to $7,320. He continued, however,
to seek the full fees requested for the initial record review
performed by his appellate counsel. Mr. Smith stated
that such review was necessary for any appeal, and
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SMITH v. MCDONOUGH 5
argued that, had he appealed only the successful claim,
presumably the Veterans Court would have awarded fees
for the entire time spent on record review.
In November 2019, the Veterans Court, in a single-
judge order, denied the full amount claimed for the 18
hours of record review and granted it for 6 hours. The
court stated that “[b]ecause counsel’s review of the RBA
[Record before the Agency] in this case ‘presumably
pertained to both the prevailing and nonprevailing [sic]
issues,’ the Court concludes that reductions are warrant-
ed to account for time spent reviewing and taking notes
regarding evidence related to the six unsuccessful claims.”
J.A. 4.
The court cited Cline v. Shinseki, 26 Vet. App 18, 19
(2012) as controlling authority. Mr. Smith timely ap-
pealed to this Court; a central issue in the appeal being
the reduction of attorney hours spent initially reviewing
the 9,389-page record from 18 hours to 6 hours.
DISCUSSION
I. The Principle of the Thing
The casual reader may be surprised that the Govern-
ment conducts litigation up to a U.S. Court of Appeals in
Washington over what amounts to about $2,000, the
difference between what the Veterans Court concluded
the Government owed under the EAJA and what the
appellant Mr. Smith claimed. But as the saying goes, it is
not the money, it is the principle of the thing.
The principle in this case, and equally important in
future cases, is whether, in a case in which not all claims
succeed, an appellate counsel who spends significant time
initially reviewing the extensive record of the case in
preparation for representing a client on appeal is entitled
to recompense under the EAJA for the time thus spent.
Or is the rule instead that counsel is entitled to reim-
bursement only for a fractional proportion of that time
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6 SMITH v. MCDONOUGH
based not on the number of potentially valid legal theories
counsel identifies from the review and presents on appeal,
but only on that fraction that captures the favor of the
appellate court?
The Government invites our attention to the fact that
in this case the Veterans Court award was actually gen-
erous, since it granted an award at a rate higher than the
proportion of the claims upon which Mr. Smith succeeded.
Thus, says the Government, since Mr. Smith was unsuc-
cessful on 86% of the claims raised, the Veterans Court
would have been within its discretion to reduce the num-
ber of hours claimed on initial record review to one-
seventh, or 14%, of the hours originally claimed rather
than the roughly one-third reduction made. (We note that
the Government argued for the smaller 14% outcome
before the Veterans Court but was unsuccessful.)
In appellate work some lawyers use the “shotgun” ap-
proach—throw every plausible theory at the judges in
hopes that one will stick. More experienced lawyers will
often limit their case to perhaps two or three of the best
theories available, figuring, correctly, that the shotgun
approach suggests there really is no single good theory by
which the appellant could prevail.
The problem is that counsel cannot know in advance
what causes, and which theories, will win or lose on
appeal against a determined Government; counsel can
only make a best guess. But before making a guess, if it
is to be an educated guess, counsel must know the facts of
the case, how the earlier decision-makers viewed them,
and the legal rules that apply.
Thus, invoking the proportional payout method as the
applicable law of the EAJA regarding the preliminary
review of the record encourages corner-cutting to save
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SMITH v. MCDONOUGH 7
time and cherry-picking of obvious matters, leaving all
else aside. As Amici note 2:
Without a complete review, however, potential
claims will likely be missed, and the briefing of
claims that are brought may fail to identify all the
relevant material facts and arguments. Govern-
ment attorneys, meanwhile, being unaffected by
the limitation on recovery of attorneys’ fees, will
not be similarly limited and surely, as competent
appellate lawyers, will take the time to review the
complete record of the proceedings below. The re-
sult will advantage one side of the case over the
other and skew the briefing before the courts.
Amici Br. 17. Is this what Congress intended in enacting
the EAJA?
II. Jurisdiction to Decide
Before we can answer that question, the Government
challenges our power (subject-matter jurisdiction) to
address the question. When a case comes before this
court with the Government having won in the earlier
round, rarely does the Government fail to raise the ques-
tion of this court’s jurisdiction, objecting to our even
hearing the case. It did not fail here. Admittedly, in
appeals from the Veterans Court, this court’s subject-
matter jurisdiction is uniquely limited. See 38 U.S.C.
§ 7292.
2 Amici, the Judge David L. Bazelon Center and
several other organizations, emphasize the negative
impact the Veterans Court rule has on Congress’s purpose
in enacting the EAJA, not only on veterans cases but for
all aggrieved plaintiffs.
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8 SMITH v. MCDONOUGH
Congress has decreed that we have jurisdiction to ad-
dress questions of law, but not questions of fact or appli-
cations of law to fact. Id. However, in those cases in
which we do have subject-matter jurisdiction, we decide
all relevant questions of law and set aside any statutory
interpretation that is “arbitrary, capricious, an abuse of
direction, or otherwise not in accordance with law.” Id.§ 7292(d)(1)(A).
The Government casts this case as an unreviewable
one. It asserts that the Veterans Court made a purely
factual determination that not all hours claimed for the
initial review could have related directly to the successful
claim, and then decided to reduce the award by applying
to that fact what the court understood as settled law. The
Government misapprehends the case. The Veterans
Court’s decision was premised not on the particulars of
the facts, but on the court’s interpretation of the law,
specifically § 2412, based on its view of prior Veterans
Court opinions.
It is certainly true that the EAJA does not permit
compensation for lawyering time spent on behalf of claim-
ants who do not have a winning case. When the claimant
is a winner on the only issues argued, the matter is easily
determined. Assuming both the time and the charges are
reasonable and the three basic criteria, noted earlier, for
an EAJA award are met, the claimant is entitled to reim-
bursement for the time spent by counsel in winning the
case. Ordinarily no issue would be made about including
an initial review of the record since it would be assumed
to be a necessary part of preparation for the winning case.
In the circumstance when a case is partly won but
partly lost, there arises a line-drawing problem—some
kind of allocation must be made between the winning and
losing issues and the lawyering time spent on each. Since
unsuccessful (non-prevailing) claims existed in this case,
the Veterans Court interpreted the statute as requiring a
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SMITH v. MCDONOUGH 9
presumption that attorney time spent on initial record
review must be allocated between the successful and
unsuccessful claims. According to the Veterans Court, the
statute required a reduction in time spent on record
review whenever an unsuccessful issue has been claimed,
regardless of whether the time spent on record review was
initially necessary for identifying the potential issues—
both winners and losers—for appeal.
As we shall explain more fully below, the Veterans
Court’s view of the statutory mandate was mistaken. We
have jurisdiction in this matter because Mr. Smith’s
appeal presents a question of law—whether the Veterans
Court properly interpreted the EAJA, 28 U.S.C. § 2412,
when rendering its decision. Here, we review the inter-
pretation of the EAJA as a question of law, without defer-
ence to the Veterans Court’s view. See Patrick v.
Shinseki, 668 F.3d 1325, 1329 (Fed. Cir. 2011).
III. Attorneys’ Fees Under the EAJA
In general, the EAJA requires an award of fees, in-
cluding reasonable attorney fees and expenses, to a pre-
vailing party upon proper application, unless the
Government’s contrary position was substantially justi-
fied, or special circumstances make an award unjust. See
28 U.S.C. § 2412(d)(1)(A). The EAJA’s essential purpose
is “to ensure that litigants ‘will not be deterred from
seeking review of, or defending against, unjustified gov-
ernmental action because of the expense involved.’”
Patrick, 668 F.3d at 1330 (footnote and citation omitted).
See also H.R. Rep. No. 98-992, at 4 (1984); S. Rep 98-586,
at 9 (1984); Matthew L. Wiener, Admin. Conf. of the
United States, Equal Access to Justice Act Awards Report
to Congress Fiscal Year 2019 (Mar. 2020).
According to the Supreme Court, a prevailing party
under the EAJA should recover for time “reasonably
expended” on successful claims, but not on unsuccessful
claims. See Comm’r v. Jean, 496 U.S. 154, 161 (1990);
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10 SMITH v. MCDONOUGH
Hensley v. Eckerhart, 461 U.S. 424, 435 (1983). 3 In ex-
plaining the line-drawing process, the Court stated:
Much of counsel’s time will be devoted generally
to the litigation as a whole, making it difficult to
divide the hours expended on a claim-by-claim ba-
sis. Such a lawsuit cannot be viewed as a series of
discrete claims. Instead the district court should
focus on the significance of the overall relief ob-
tained by the plaintiff in relation to the hours rea-
sonably expended on the litigation. . . . There is no
precise rule or formula for making these determi-
nations.
Hensley, 461 U.S. at 435–36.
Accordingly, in an appropriate case, courts properly
award attorney fees for time necessarily spent on a suc-
cessful claim, even if that time was also spent on unsuc-
cessful claims. See, e.g., Ustrak v. Fairman, 851 F.2d 983,
988 (7th Cir. 1988) (“A partially prevailing plaintiff
should be compensated for the legal expenses he would
have borne if his suit had been confined to the ground on
which he prevailed plus related grounds within the mean-
ing of Hensley.”). The relevant inquiry is whether the
time spent was “reasonably expended.” See Wagner v.
Shinseki, 640 F.3d 1255, 1262 (Fed. Cir. 2011).
In this case, in an appeal that was only partially suc-
cessful, Mr. Smith submitted an application for attorney
fees, including time spent initially reviewing the record.
Rather than determining whether that time could be
reasonably understood as preparation for bringing the
successful claim, the Veterans Court assumed that be-
3 Courts also have discretion to reduce or deny
awards for certain dilatory conduct by a prevailing party.
28 U.S.C. § 2412(d)(1)(C).
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SMITH v. MCDONOUGH 11
cause such time must have been spent on both the suc-
cessful and unsuccessful claims, it therefore required a
reduction in those hours. This was error.
The Veterans Court misinterpreted § 2412 by adopt-
ing such a rule. 4 There is no statutory requirement that
time reasonably expended in initial record review must be
reduced, merely because there were eventually both
successful and unsuccessful claims pursued in the case.
To the contrary, the law requires that Mr. Smith’s counsel
be compensated for time that was necessarily expended
on the initial review of the record, regardless of whether
some of the claims that came from that review ultimately
were found not to prevail, if that time was necessary for a
successful appeal. See Hensley, 461 U.S. at 435.
Time spent reviewing the record is indispensable to
pursuing any appeal, regardless of how many issues are
ultimately appealed and regardless of the degree of suc-
cess. Indeed, before this court and the Veterans Court,
the Government admitted that an attorney must always
review the entire record at the outset in any appeal. See
Oral Argument at 17:15–17:25. See also J.A. 196 (in
response to EAJA application, the Government stated “it
is sensible for attorneys in all cases to review the entirety
of the record”). Failure to review the full record before
identifying and asserting claims on appeal would do a
4 The court relied on Cline, 26 Vet. App. at 331,
which misread Vazquez-Flores v. Shinseki, 26 Vet. App. 9,
17 (2012). In Vazquez-Flores, the court actually awarded
attorney fees for general case management and correctly
noted that time for record review was permitted and
“inextricably linked to the preparation of the entire case
and there is no basis for equitable apportionment.” 26
Vet. App. at 17 (quoting Elcyzyn v. Brown, 7 Vet. App.
170, 177 (1994)).
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12 SMITH v. MCDONOUGH
disservice not only to the client, but also to the court,
which relies on counsel to frame the issues and point the
court to the relevant materials.
The concerns underlying the EAJA are particularly
important in the context of veterans’ cases such as Mr.
Smith’s appeal. See, e.g., Patrick, 668 F.3d at 1330. Most
veterans pursue their claims before the Department of
Veterans Affairs, including up through the Board of
Veterans’ Appeals, either pro se or with non-lawyer assis-
tance of a veterans’ service organization (“VSO”) or simi-
lar organization. See, e.g., Connie Vogelmann, Admin.
Conf. of the United States, Self-Represented Parties in
Administrative Hearings 30 (Oct. 28, 2016) (stating that
more than 75% of veterans who appeared before the
Board in 2015 were represented by VSOs or similar
organizations).
The time spent by Mr. Smith’s attorney on initial rec-
ord review was necessarily expended on preparation for
developing the case, including the successful claim, and
would have been necessary for any appeal. But that time
was particularly necessary here. As this court has recog-
nized, although VSOs “provide invaluable assistance to
claimants seeking to find their way through the labyrin-
thine corridors of the veterans’ adjudicatory system, they
are ‘not generally trained or licensed in the practice of
law.’” Comer v. Peake, 552 F.3d 1362, 1369 (Fed. Cir.
2009) (citation omitted).
By contrast, cases before the Veterans Court often
have the benefit of an attorney from a veterans’ organiza-
tion or a law firm’s pro se advocacy group. In this case,
Mr. Smith was represented by attorneys from the Veter-
ans Legal Advocacy Group. Competent appellate repre-
sentation requires careful review of the full record in
these cases, since the record was not necessarily made by
persons trained in legal appeals. While record review is
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SMITH v. MCDONOUGH 13
necessary for any successful appeal, it is especially neces-
sary in a case such as this.
Indeed, if Mr. Smith had brought only the successful
claim, those hours would have been fully compensated.
Here, the facts are undisputed: Mr. Smith’s attorney
spent 18 hours on her initial review of the 9,389-page
record. She spent that time to read the record, take notes
on it, and ensure compliance with the Veterans Court’s
rules. There may be instances in which the time spent on
reviewing the record is unreasonable or could be appor-
tioned—this is not one of them.
Based on the proper legal interpretation of § 2412 in
light of Hensley, the Veterans Court should not have
denied compensation for the reasonable time Mr. Smith’s
attorney spent initially reviewing the record. We have
considered the parties’ remaining arguments and found
them unpersuasive.
CONCLUSION
For the foregoing reasons, we reverse the decision of
the Veterans Court with respect to its interpretation of
§ 2412 and its concomitant reduction in reimbursable
attorney time spent on initial record review. We remand
with instructions to increase the amount awarded from
$5,191.61 to $7,603.61, to reflect an increase of $2,412
based on the 18 hours of record review, at the undisputed
rate of $201 per hour. 5 We affirm the remainder of the
Veterans Court’s decision.
REVERSED-IN-PART, AFFIRMED-IN-PART, AND
REMANDED
5 The fact that the statutory citation for the EAJA
and the amount of dollars owed to the Appellant happens
to be the same number is purely coincidental.
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14 SMITH v. MCDONOUGH
COSTS
Costs are awarded to the Appellant.