Roadblock to collecting court awarded attorney’s fees

Sheila McCorkle is a summer associate at Akin Gump.

Yesterday in Astrue v. Ratliff (No. 08-1322), the Court made it a little more difficult for some attorneys to collect fees in cases brought against the government. In an unanimous decision written by Justice Thomas, the Court held that, under the Equal Access to Justice Act (EAJA), an award of attorney’s fees is payable to the litigant, rather than the litigant’s attorney; thus, the federal government can use that award to satisfy a debt owed by the litigant to the United States.   Justice Sotomayor filed her first concurring opinion, which was joined by Justices Stevens and Ginsburg. [Matt Sundquist’s preview and recap of oral arguments in the case are available here and here.]

The respondent in the case, Catherine Ratliff, is an attorney who successfully represented Ruby Willow Kills Ree in her suit challenging the denial of her Social Security benefits. The district court granted Ree’s motion for an award of $2112.60 in attorney’s fees under the EAJA, which provides in 28 U.S.C. § 2412(d)(1)(A) that “a court shall award to a prevailing party . . . fees and other expenses . . . in any civil action brought by or against the United States.”   However, the government sought to use the award to offset an outstanding debt owed by Ree to the federal government.

Ratliff filed suit against the Social Security Commissioner to recover the fees, arguing that fees awarded under Section 2412(d) belonged to her rather than Ree.  The district court rejected that argument but, on appeal, the Eighth Circuit reversed. While acknowledging a conflict with the decisions of other circuits, the court of appeals deemed itself bound by its own precedent and thus held that “attorneys’ fees awarded under the EAJA are awarded to the prevailing parties’ attorneys, rather than to the parties themselves.”

The Court in turn reversed the Eighth Circuit.  Emphasizing longstanding precedent holding that the term “prevailing party” in fee statutes is a “term of art” referring to the prevailing litigant, the Court found nothing in EAJA to the contrary. Indeed, the Court reasoned, other provisions in the statute clearly distinguish the party who receives the fee award (the litigant) from the attorney:  Section 2412(d)(1)(B), for example, treats attorneys on par with other service providers in a manner that foreclosed the possibility that attorneys have a right to the awarded fee.

Moreover, the statute’s use of the verb “award” does not render fees payable to the prevailing party’s attorney. In rejecting Ratliff’s argument to the contrary, the Court explained that in a litigation context the transitive verb “award”  had a well-settled meaning of “giving or assigning” by judicial decree. Thus, its plain meaning in subsection (d)(1)(A) is that the court shall “give or assign” attorney’s fees by judicial determination to the prevailing party. The fact that the prevailing party’s attorney may have a beneficial interest or contractual right in the fees, the Court added, did not alter the meaning of “prevailing party.”

Nor was the Court persuaded by the argument that the EAJA fee provision is at least ambiguous in light of other provisions in the statute, the Social Security Act (SSA), and the government’s practice of paying some EAJA fees awards directly to attorneys in other cases. Rather, the Court emphasized, the fact that SSA provisions granting fee awards are directly payable to attorneys merely demonstrates that Congress “knows how” to create a direct fee requirement when it wants.

In her concurrence, Justice Sotomayor agreed with the Court that its holding was supported by its precedents and the EAJA’s text.  However, she believed that had it considered the question, Congress would “not have wanted EAJA fee awards to be subject to offset.”   In particular, she expressed concern that the Court’s ruling would undermine the purpose of EAJA, whose fee awards were created by Congress to reduce the financial barriers associated with challenging unreasonable government actions. Thus, she warned, by subjecting EAJA awards to administrative offsets for litigants with debts, the Court’s ruling will inevitably make it more difficult for persons of limited means to obtain legal representation.