Jerome I. Apodackis v. R. James Nicholson

UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

NO . 03-1400(E)

JEROME I. APODACKIS, APPELLANT ,

V.

R. JAMES NICHOLSON ,

SECRETARY OF VETERANS AFFAIRS, APPELLEE.

On Appellant's Application for Attorney Fees and Expenses

(Decided March 16, 2005 )

Barton F. Stichman, Nancy L. Foti, Andrew P. Reynolds, and James W. Stewart (nonattorney

practitioner), all of Washington, D.C., were on the pleadings for the appellant.

Tim S. McClain, General Counsel; R. Randall Campbell, Assistant General Counsel; Brian

B. Rippel, Deputy Assistant General Counsel; and Erika E. Liem, all of Washington, D.C., were on

the pleading for the appellee.

Before IVERS, Chief Judge, and STEINBERG and KASOLD, Judges.

KASOLD, Judge: The appellant filed through counsel a December 18, 2003, application for

attorney fees and expenses pursuant to the Equal Access to Justice Act (EAJA), as codified in part

at 28 U.S.C. § 2412(d). For the reasons set forth below, the Court will grant the application.

I. BACKGROUND

On December 1, 2003, the Court granted the parties' joint motion to vacate a June 2, 2003,

Board of Veterans' Appeals (Board) decision that had denied the appellant's claim of entitlement to

an effective date for the award of special monthly compensation prior to March 26, 1993. The joint

motion was predicated on the Secretary's concession that he had failed to provide certain notice as

required under section 5103(a), title 38, U.S. Code, and the matter was remanded for readjudication.

The mandate of the Court was entered on that same date.

In the application pending before the Court, the appellant seeks a total of $3,126.24 in

attorney fees and expenses. Application (Appl.) at 5-6. The appellant calculates the requested

amount based upon (1) expenses in the amount of $36.11; (2) 0.75 hours spent by Barton Stichman,

an attorney-member of the Court's bar, at a rate of $149.09 per hour; (3) 3.75 hours spent by Louis

J. George, an attorney-member of the Court's bar, at a rate of $149.09 per hour; (4) 0.75 hours spent

by Ron Abrams, an attorney-member of the Court's bar, at a rate of $149.09 per hour; (5) 0.75 hours

spent by Nancy L. Foti, an attorney-member of the Court's bar, at a rate of $149.09 per hour; and (6)

17.25 hours, at a rate of $127.28 per hour, spent by the appellant's lead representative, James

Stewart, who is a nonattorney practitioner employed by the National Veterans Legal Services

Program and certified to practice before this Court under the supervision of Mr. Stichman in

accordance with Rule 46(b)(1) of the Court's Rules of Practice and Procedure.

The Secretary concedes that the appellant is a "prevailing party" and that the Secretary's

position was not "substantially justified." Response (Resp.) at 1. The Secretary's only dispute is

with the fee for Mr. Stewart. The Secretary asserts that, instead of the requested $127.88-per-hour

fee, Mr. Stewart should be awarded a $120-per-hour fee based on the Court's opinions in Abbey v.

Principi, 17 Vet.App. 282 (2003) (holding Court empowered to award fees "in an amount

determined appropriate" for the work of nonattorney practitioners; finding the $120-per-hour rate

requested there appropriate for Mr. Stewart, the same nonattorney practitioner whose hourly fee is

disputed here), and Pentecost v. Principi, 17 Vet.App. 257 (2003) (same). Resp. at 2. Principally,

the Secretary argues that a cost-of-living adjustment (COLA) to increase Mr. Stewart's hourly rate

above the $125 statutory cap is not available because the United States Court of Appeals for the

Federal Circuit (Federal Circuit), in Levernier Construction, Inc. v. United States, 947 F.2d 497 (Fed.

Cir. 1991), "rejected a COLA . . . [for] the statutory rate paid to paralegals." Resp. at 2.

The appellant argues that the Federal Circuit did not hold that a paralegal could never be

compensated under the EAJA at a rate exceeding the statutory maximum but "actually held that a

[COLA] cannot be added to the prevailing market rate for either attorneys or paralegals." Reply at

8. Alternatively, he contends that, even if the Secretary were correct in his interpretation of

Levernier, this Court is not precluded from permitting a COLA to be applied to the statutory

maximum for a nonattorney practitioner because, in accordance with section 403 of the Veterans

2

Benefits Act of 2002 (VBA), Pub. L. No. 107-330, § 403, 116 Stat. 2819, 2833, the Court is

authorized "to award fees for non[]attorney practitioners 'in an amount determined appropriate by'

th[e] Court." Reply at 8-9.

II. ANALYSIS

A. Eligibility for Award

This Court has jurisdiction to award reasonable attorney fees and expenses pursuant to

28 U.S.C. § 2412(d)(2)(F), and the Court may award such fees for the work of a nonattorney

practitioner under section 403 of the VBA. The appellant's December 18, 2003, EAJA application

was filed within the 30-day EAJA application period set forth in 28 U.S.C. § 2412(d)(1)(B) and

contains the following: (1) A showing that, by virtue of the Court's remand, the appellant is a

prevailing party within the meaning of the EAJA; (2) a showing that he is a party eligible for an

award under the EAJA because his net worth does not exceed $2,000,000; (3) an allegation that the

position of the Secretary was not substantially justified; and (4) an itemized fee statement.

Accordingly, the application satisfies all EAJA "application-content specifications." Scarborough

v. Principi, 541 U.S. 401 (2004); see also 28 U.S.C. § 2412(d)(1)(A), (1)(B), (2)(B); Bazalo v. West,

150 F. 3d 1380, 1383-84 (Fed. Cir. 1998); Cullens v. Gober, 14 Vet.App. 234, 237 (2001) (en banc).

In order to receive an EAJA award, the appellant must be a prevailing party. See 28 U.S.C.

§ 2412(d)(1)(A) ("[C]ourt shall award to a prevailing party . . . fees and other expenses . . . .");

Sumner v. Principi, 15 Vet.App. 256, 260-61, 264-65 (2001) (en banc) (prevailing-party status

established by award of VA benefits or a merits-stage remand predicated on court-recognized error

or Secretary's concession of error), aff'd sub nom. Vaughn v. Principi, 336 F.3d 1351 (Fed. Cir.

2003); Briddell v. Principi, 16 Vet.App. 267, 271-72 (2002); Cullens, supra. In this case, because

the Court's remand was expressly predicated on the Secretary's concession of error, the Court agrees

with the parties that the appellant was a prevailing party for EAJA purposes. See 28 U.S.C.

§ 2412(d)(1)(A); Sumner, supra; McCormick v. Principi, 16 Vet.App. 407, 411 (2002); Bridell,

supra. Moreover, the Secretary here concedes that his position was not substantially justified and

the Court need not address this issue further. See Cook v. Brown, 6 Vet.App. 226, 237 (1994)

(concluding that Court need not address whether Secretary's position was "substantially justified"

3

when Secretary did not assert such a defense but expressly conceded that issue), aff'd, 68 F.3d 447

(Fed. Cir. 1995).

Once eligibility for an EAJA award is established, the Court must review the request for its

reasonableness. See Chesser v. West, 11 Vet.App. 497, 501 (1998) ("[I]t is incumbent upon the

Court to permit an award only of reasonable fees.") (emphasis in original) (citing Ussery v. Brown,

10 Vet.App. 51, 53 (1997)); see also 28 U.S.C. § 2412(d) (Court award shall be of "reasonable"

attorneys fees); VBA § 403 (granting Court special authority to award "reasonable" fees and

expenses to nonattorney practitioners under 28 U.S.C. § 2412(d)).

B. Reasonableness of Expenses and Attorney Fees

The applicant has presented evidence that the hourly rate requested for work performed by

each of the attorneys in this matter is reasonable (see Appl. at 5 n.1; Appl. Exhibit (Exh.) C), and the

Secretary does not contest either the hourly rate claimed for the attorneys or the expenses (see

Secretary's Resp. at 1). See Sandoval v. Brown, 9 Vet.App. 177, 181 (1996) (holding that once a

party seeking fees presents evidence to establish a prevailing market rate, the opposing party has the

burden of producing evidence to show that market rate as erroneous). In the absence of objection

by the Secretary and on review of the requested fees for the attorneys of like skill, experience, and

reputation, the Court finds both the expenses and attorney fees in this case to be reasonable and at

or below the prevailing market rate. See Chesser and Sandoval, both supra; see also Blum v.

Stenson, 465 U.S. 886, 895 n.11 (1984) (prevailing market rate is one that is in line with rates of

other practitioners of reasonably comparable skill, experience, and reputation). Therefore, the only

remaining issue is the appropriate EAJA fee to be paid for the work of Mr. Stewart.

C. Reasonableness of Nonattorney-Practitioner Fees

Section 403 of the VBA authorizes the Court to award reasonable fees and expenses under

section 2412(d), in an amount determined to be appropriate by this Court, for the work of a

nonattorney practitioner. See Evington v. Principi, 18 Vet.App. 331, 334-35 (2004) (case involving

Mr. Stewart, the same nonattorney practitioner whose hourly fee is at issue here). In Evington, the

Court specifically rejected the Secretary's argument that the fees payable to a nonattorney practitioner

were subject to the EAJA-statutory-rate cap (without COLA). In so holding, the Court noted its

broad discretion under VBA § 403 to determine an appropriate fee for nonattorney practitioners and

4

made reference to a statement in Pentecost that such fees should not be as high as those of licensed

attorneys or limited to the prevailing market rate for paralegals. Evington, 18 Vet.App. at 335; see

also Pentecost, 17 Vet.App. at 260-61 (stating that the Court "cannot, in the exercise of common

sense, order that nonattorney practitioners be compensated as attorneys, but neither is their

compensation to be limited by the prevailing market rate for paralegals"). In Evington, the Court

concluded that the rate of $126.73 per hour requested for services rendered by Mr. Stewart from

April to December 2003 was reasonable and appropriate as the prevailing market rate for Mr.

Stewart based on his reputation, skill, and other factors. Evington, 18 Vet.App. at 336-37. In Wilson

v. Principi, the Federal Circuit, in discussing this Court's action in Evington explained:

[T]he Court of Appeals for Veterans Claims awarded fees for work

performed by Mr. Stewart after the enactment of the VBA at the rate

of $126.73 per hour, an increase over the previously approved $120

rate based on the change in the Consumer Price Index during the

relevant time period.

Wilson, 391 F.3d 1203, 1207 (Fed. Cir. 2004). See also Elcyzyn v. Brown, 7 Vet.App. 170, 179-81

(1994) (explaining the application of the change in the Consumer Price Index (CPI) for All Urban

Consumers (CPI-U or CPI-ALL) for calculation of a fee award). Accordingly, pursuant to Elcyzyn,

Evington, and Wilson, once a prevailing market rate is determined for the nonattorney practitioner

based on a certain skill level, reputation, and geographic area, that prevailing market rate can be

adjusted over time by application of the appropriate percentage increase of the change in the

appropriate CPI-U. Of course, the rate ultimately approved must also be reasonable, based on

numerous factors, including skill level and reputation. See Blum, supra.

In Abbey and Pentecost, both supra, the Court established an hourly rate of $120 for Mr.

Stewart, who is a highly skilled nonattorney practitioner. The appellant suggests recognizing $120

as the prevailing market rate in the year 2001 for nonattorney practitioners of his skill level and

establishing June 2001 as the base month for computing future adjustments to that prevailing market

rate. Appl. Exh. D; Resp. at 1-2. The appellant suggests June 2001 as the base month, because

based on application of the Elcyzyn formula to Abbey and Pentecost, the midpoint for work

performed in those cases is May and July 2001, respectively, and June 2001 is the midpoint between

those months. See App. Exh. D; Elcyzyn, supra; see also Abbey and Pentecost, both supra. The

5

Court concurs and holds that June 2001 is an appropriate base month from which future adjustments

can be made to the prevailing market rate of $120 per hour for nonattorney practitioners of Mr.

Stewart's skill level and reputation, practicing in the Washington, D.C., area.

In the instant case, the appellant proposes September 2003 as the midpoint for the work

performed by Mr. Stewart. Given that the work was performed over the period from August to

December 2003, with a joint motion filed in November 2003, and absent objection by the Secretary,

the Court agrees that September is an appropriate midpoint. In September 2003, the CPI-U for the

practitioner's area – Washington-Baltimore, D.C.-Maryland-Virginia-West Virginia – was 117.2.

See CPI – Washington-Baltimore, DC-MD-VA-WV Area, available at

http://www.bls.gov/ro3/fax_9156.htm (last modified Dec. 17, 2004). The maximum permissible

hourly rate is calculated by subtracting the CPI-U for June 2001, 110.5, from the CPI-U for

September 2003, 117.2. This difference, 6.7, is divided by the CPI-U for June 2001, 110.5. The

resulting percentage, 6.06%, is multiplied by the prevailing market rate, $120.00, to determine the

permissible increase to the prevailing market rate, $7.28. Finally, the permissible increase to the

prevailing market rate, $7.28, is added to the previously determined prevailing market rate, $120.00,

to determine the current prevailing market rate, $127.28, which is the maximum permissible hourly

rate for a nonattorney practitioner of Mr. Stewart's skill, reputation, and geographic area, for the

period in question. See Elcyzyn, supra; see also Wilson and Evington, both supra.

Since the prevailing market rate, as adjusted in accordance with Wilson, Evington, and

Elcyzyn, all supra, is based on Mr. Stewart's skill level, reputation, and geographic area, we find that

the rate of $127.28 per hour requested by the appellant for services provided by Mr. Stewart is

reasonable, and the Court will award that rate for the 17.25 hours of work submitted for Mr. Stewart.

Absent unusual market influences or special circumstances, the Abbey/Pentecost prevailing

market rate established in 2001 and applied herein using the above formula, represents effectively

the presumptive high-end of the prevailing-market-rate scale for a nonattorney practitioner (given

the level of Mr. Stewart's expertise, reputation, and the other factors mentioned above, and the cost

of living in this geographic area) with the presumptive low end established by the rate for the

attorney-supervised paralegal. See Pentecost, supra. This is not to say that an appellant might not

seek and be awarded a higher rate for a nonattorney practitioner's work or that the Secretary might

6

not successfully seek a lesser rate. See Blum, supra.

Application of the Elcyzyn formula to EAJA requests for nonattorney practitioner fees should

facilitate future determinations of the applicable prevailing market rate and judicial review of the

reasonableness of those EAJA requests. See Pierce v. Underwood, 487 U.S. 552, 563 (1988) ("a

'request for attorney's fees should not result in a second major litigation'") (citing Hensley v.

Eckerhart, 461 U.S. 424, 437 (1983)); Frankel v. Derwinski, 1 Vet.App. 23, 25-26 (1990).

III. CONCLUSION

Upon consideration of the foregoing and the pleadings in this matter, the appellant's EAJA

application is GRANTED.

APPLICATION GRANTED.

7