Wednesday, June 22, 2016

Court Scrutiny of EAJA Settlements with a Federal Agency



The parties attempted to settle this matter, twice.  The court denied the opportunity to settle this matter because the Commissioner did not confess a lack of substantial justification.  Counsel  represents to the court that no other court in which he practices requires a confession of error or a confession of a lack of substantial justification in order to permit a represented party to resolve a matter of questionable or certain loss.  Would the court require the United States to admit to negligence in an action under the Federal Tort Claims Act in order to resolve a negligence claim?  Undoubtedly that would prevent resolution of claims because the alleged tort feasor rarely admits to liability in a settlement – the parties settle for reasons that they don’t admit to each other much less the world.  




The United States is never estopped in other cases because the Commissioner settled any claim arising under the EAJA.  New Hampshire v. Maine, 532 U.S. 742, 755 (2001) (citing Heckler v. Community Health Services of Crawford Cty., Inc., 467 U. S. 51, 60 (1984)).  Settlement does not conclusively establish weakness and the court should not penalize or discourage useful settlements.  Pierce v. Underwood, 487 U.S. 552, 568 (1988). 


And the risk to the fisc is significant.  The preparation of serial stipulations, motions, or other documents to evade the court’s requirement that a settlement include a confession of sin eats at the most valuable public and private asset of the parties – the time of their counsel.  Nor does this motion seeking the court finding of a lack of substantial justification help.  But for the settlement, this party would seek $4,600 in fees and expenses already itemized and additional time for the preparation of this motion.  Settlement allows the Commissioner to avoid some of its exposure in exchange for a sacrifice of some of the plaintiff’s potential fee recovery all with the serendipitous result that allowing parties to settle avoids the court’s expenditure of time and effort in the noble quest that the ably represented United States not give away the contents of the Treasury or the Social Security Trust Funds.   

In the final analysis, the court’s oversight of the EAJA process should not amount to a rigorous extraction of itemization and confession of each element of the fee request.  The court need exercise care in approving settlement of class actions because of the divergent interests of the class representatives, class counsel, and the members of the class.  Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) (risk, expense, complexity, likely duration, amount offered, extent of discovery, stage of proceedings, experience and views of counsel, presence of a government entity, and view of the proposed class).   But those factors are not present in individual party litigation after the close of the merits.  Fees should not give rise to a second round of motion practice or litigation.  Hensley, 461 U.S. at 437.  The Supreme Court focused on the desired practice – “Ideally, of course, litigants will settle the amount of a fee.”  Id.  If the parties don’t settle, then and only then does the prevailing party bear the burden of proof of time, rates, and entitlement.  Id.  Where the parties resort to the ideal, the court should not put the parties to the expense of the unideal.  The court should approve the fee agreed upon by the parties.

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