Smith v. McDonough

Case: 20-1354   Document: 78    Page: 1   Filed: 04/29/2021

   United States Court of Appeals
       for the Federal Circuit

                 ROBERT L. SMITH,


              VETERANS AFFAIRS,


     Appeal from the United States Court of Appeals for
 Veterans Claims in No. 17-4391, Judge Amanda L. Mere-

                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;
 cy Group, Arlington, VA.

     ROBERT R. KIEPURA, Commercial Litigation Branch,
 Civil Division, United States Department of Justice,
 Washington, DC, argued for respondent-appellee. Also
Case: 20-1354    Document: 78     Page: 2   Filed: 04/29/2021

 2                                     SMITH   v. MCDONOUGH

 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
 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.
     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-
     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.
                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.”

§ 7292(d)(1)(A).

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.

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-

Hensley, 461 U.S. at 435

     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.

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.

, 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
     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.
     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.

     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.
Case: 20-1354   Document: 78    Page: 14   Filed: 04/29/2021

 14                                    SMITH   v. MCDONOUGH

 Costs are awarded to the Appellant.

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