United States District Court, Northern District of Illinois, E.D
February 16, 1982
ALLEN S. BERMAN, PLAINTIFF,
RICHARD S. SCHWEIKER, SECRETARY OF HEALTH AND HUMAN SERVICES, DEFENDANT.
The opinion of the court was delivered by: Marshall, District Judge.
This case is before us on an application for attorney's fees
from counsel for the plaintiff in an action in which plaintiff
successfully sought reversal of a decision of the Social
Security Administration which had denied plaintiff's request
for revision of his social security earnings record. On Friday,
August 14, 1981, we issued a memorandum order granting summary
judgment for the plaintiff. On the ensuing Monday, August 17,
1981, the clerk issued judgment pursuant to Rule 58,
Fed.R.Civ.P. The August 14 order was not entered on the docket
until August 17 and the August 17 judgment until September 2.
The fee application is brought pursuant to "The Equal Access
to Justice Act", 28 U.S.C.A. § 2412 (West Supp. 1981) ("the
Act"), which became effective October 1, 1981. To our knowledge
there is only one reported decision under the Act and we
confront several issues of first impression.
At the outset there are two questions of timing which we must
address. Our memorandum order granting summary judgment was
issued August 14, 1981, and judgment was issued by the clerk
August 17. However the judgment was not entered on the docket
until September 2. The Act was passed in October, 1980 and
implemented according to the following provision:
Sec. 208. This title and the amendments made by
this title shall take effect on October 1, 1981,
and shall apply to [any civil action] which is
pending on, or commenced on or after, such date.
5 U.S.C. § 504 note.*fn1
Defendants contend that our decision of August 14 or issuance
of judgment on August 17, was a final disposition of the case
with the result that the case was not pending as of October 1.
Plaintiff counters that because the time for defendant to
appeal the judgment did not run until sixty days after issuance
of the judgment, this case was still pending on the effective
date of the Act.
In addition, though the defendant has not raised the point,
the Act requires that "[a] party seeking an award of
fees . . . shall, within thirty days of final judgment in the
action, submit to the court an application for fees and other
expenses . . ." 28 U.S.C. § 2412(d)(1)(B) (1981). Thus, if
either our decision of August 14 or the clerk's issuance of
judgment on August 17 qualifies as a "final judgment", then the
fee application would be late and we could not consider it. See
Hairline Creations, Inc. v. Kefalas, 664 F.2d 652 (7th
Cir., 1981). However, if the September 2 entry of the judgment
on the docket qualifies as the date on which the judgment
became final, then the application was timely made within the
thirty day rule of the Act.
There is little legislative history or case law on the
meaning of the word "pending." What case law there is, however,
uniformly supports plaintiff's position that a case is
"pending" so long as the losing party's right to appeal has not
yet been exhausted or expired. See Perzinski v. Chevron
Chemical Co., 503 F.2d 654, 657 (7th Cir. 1974);
Williams v. State, 62 Cal.App.3d 960, 133 Cal.Rptr.
539 (1976); In re Estate of Stith, 45 Ill.2d 192,
258 N.E.2d 351, 353 (1970) (and cases cited therein). We agree that
until it becomes clear that the litigation will end with the
district court's judgment, the action is still "pending."
See also, Buckton v. NCAA, 436 F. Supp. 1258, 1262-63
(D.Mass. 1977). Absent some statement in the legislation or its
history to the contrary, we must assume that Congress meant the
term "pending" to be applied consistent with its generally
accepted meaning. Accordingly, we hold that because the
government's 60 day period within which it could appeal had not
expired on October 1, 1981, the effective date of the Act, this
action was pending on that date.
As noted earlier, the Act also requires that any fee
application be submitted within thirty days of final judgment
in the action. Rule 58, Fed.R.Civ.P. requires that "[e]very
judgment shall be set forth on a separate document." The
purpose of the separate judgment requirement is to alleviate
the "considerable uncertainty over what actions of the district
court would constitute entry of judgment, and [the] occasional
grief to litigants as a result of this uncertainty." United
States v. Indrelunas, 411 U.S. 216, 220, 93 S.Ct. 1562,
1564, 36 L.Ed.2d 202 (1973). The Supreme Court has held that
the rule "must be mechanically applied to avoid new
uncertainties as to the date on which the judgment is entered."
Id. at 221-22, 93 S.Ct. at 1564.*fn2
The two leading authorities on federal procedure make clear
that the process of entering judgment is not completed until
the judgment is recorded on the docket by the clerk:
"Entry of judgment" presupposes, of course, the
rendition of a judgment, which is a judicial act,
followed by the proper notation of the judgment in
the civil docket, which is a ministerial act of
the clerk. 6A J. Moore, Federal Practice
¶ 58.05 (1979).
To be effective as a judgment it is the separate
document known as a judgment that must be entered
on the docket. . . . Even though the separate
document exists in proper form, there is no
effective judgment until it is entered in the
docket. Although occasionally a court has been
willing to overlook the failure to enter a
judgment in the docket, this is undesirable. The
requirement that a judgment be on a separate
document and that it be entered in the docket
should be regarded a[s] mandatory in all cases. 11
C. Wright and A. Miller, Federal Practice and
Procedure § 2785 (1973) (footnotes
Were we to hold that the date of issuance of the judgment
document, rather than the date of entry on the docket, starts
the period running for notice of appeal and other post-judgment
motions, given the delay which often occurs in entering the
court's actions on the docket sheet, the time for filing such
motions would sometimes run before the parties ever had notice
of the court's judgment. The problem would be particularly
acute for filing notice of appeal, since if notice is filed
before the Rule 58 judgment is entered the appellate court does
not have jurisdiction to decide the case. See Furr's
Cafeteria, Inc. v. NLRB, 566 F.2d 505 (5th Cir. 1978);
Levin v. Wear-Ever Aluminum, Inc., 427 F.2d 847 (3d
Cir. 1970); 11 Wright and Miller, supra § 2781 n.
8. Cf. note 2, supra.
Our decision is consistent with the opinion of the Seventh
Circuit in Brainerd v. Beal, 498 F.2d 901 (7th Cir.
1974), where the court held that the date of entry as reflected
on the docket could not be challenged by an affidavit to the
effect that entry was actually made at some later date.
Id. at 902. Brainerd suggests that if the
docket had reflected some date other than the date on which the
judgment was signed, the date of entry would be controlling.
Some time after that decision the Clerk of this court changed
procedures to reflect on the docket the actual date of entry as
well as the date the judgment or order was issued. In the
instant case, while the Rule 58 judgment was issued August 17,
it was not recorded on the docket until September 2. Because
the September 2 date is controlling, the application filed by
the plaintiff on October 1 was timely.
The government next contends that the Act does not apply to
this case asserting that the fee provision of the Social
Security Act, 42 U.S.C. § 406(b)(1) (1976), is the sole
authorization for fees in social security cases, and that in
any event the Act does not cover civil actions to review social
security decisions. We reject both contentions.
The first assertion is based on Section 206 of the Act,
28 U.S.C. § 2412 note, which provides that "[n]othing in
section 2412(d) . . . alters, modifies, repeals, invalidates,
or supersedes any other provision of Federal law which
authorizes an award of such fees and other expenses to any
party other than the United States that prevails in any civil
action brought by or against the United States." If the Social
Security Act, 42 U.S.C. § 406(b)(1), permitted plaintiff to
recover fees, then it would be plaintiff's exclusive remedy.
However, § 406(b)(1) only covers the awarding of fees where
the party seeks reimbursement for past due benefits, and limits
the award to 25% of the total judgment. This is not such a
case; here, plaintiff sought, and won, the right to pay social
security taxes and receive four quarters of social security
were no monetary benefits sought and our judgment included no
award of damages or benefits on which to base a fee award under
§ 406(b)(1). See Berman v. Schweiker, No. 80 C
2737 (N.D.Ill. August 14, 1981).
The House Report indicates that the savings clause of §
206 of the instant Act does not foreclose application of the
Act in this situation: "Moreover, this section is not intended
to replace or supersede any existing fee shifting
statutes . . ., or to alter the standards or the case law
governing those Acts. It is intended to apply only to cases
(other than tort cases) where fee awards against the government
are not already authorized." H.Rep.No.96-1418, reprinted in
 U.S.Code & Admin.News 4953, 4984, 4997.
Defendant contends that an administrative action by the
Social Security Administration is not covered by the Act. At
the administrative level, the Act covers only an "adversary
adjudication". 5 U.S.C. § 504(a)(1), (b)(1)(C). The
administrative portion of a social security proceeding does not
qualify because the Social Security Administration does not
take a position which is represented through counsel in those
proceedings. Thus, fees may not be awarded under the Act to a
social security beneficiary who prevails at the administrative
level. But the Act does cover judicial review of social
security administrative proceedings by a district court where
the agency takes a position in the case. The conference report
[t]he conference substitute defines adversary
adjudication as an agency adjudication defined
under the Administrative Procedures Act where the
agency takes a position through representation by
counsel or otherwise. It is intended that this
definition precludes an award in a situation where
an agency, e.g. the Social Security
Administration, does not take a position in the
adjudication. If, however, the agency does take a
position at some point in the adjudication, the
adjudication would become adversarial.
Conf.Rep.No. 96-1434, reported in 
U.S.Code & Admin.News 5003, 5012.
Perhaps more to the point, the House Report states, "[t]here
was much discussion whether the United States should be liable
when it is a named party and represented in a civil action
under the Social Security Act. The Committee decided that civil
actions should be covered." H.Rep.No.96-1418 supra at
4991. That view was confirmed by one of the bill's supporters
in a discussion on the House floor prior to final passage:
MR. ROSTENKOWSKI. But as I read the language
adopted by the Senate and the language that is
presently before us, there is no exemption for
social security cases in this language.
MR. RAILSBACK. All right, if the gentleman would
yield. I think the gentleman is wrong . . . [I]n
the conference they adopted the language of the
Committee on the Judiciary bill which I say to my
friend from Illinois would rather drastically
limit recovery only to actions where they went
into the Federal district court. In other
words, it would not apply to the administrative
proceedings. Cong. Rec. H-10220, 96th Cong., 2d
Sess. (October 1, 1980) (emphasis supplied).
That position was repeated by several other speakers. See
generally id. at 10218-10225. In this action the agency is
the named defendant, an active participant in contested
litigation, and takes a position through counsel. Therefore
this action is covered by the Act.
We come now to the standard for awarding fees under the Act.
A "prevailing party" in any civil action against the United
States is entitled to fees "unless the Court finds the position
of the United States was substantially justified."
28 U.S.C. § 2412(d)(1)(A). Where, as here, the nongovernmental party
clearly "prevailed", the burden is on the government to
demonstrate that, although it lost the case, its position was
"substantially justified." H.Rep.No.96-1418, supra at
5011. See Alspach v. District Director of Internal
Revenue, 527 F. Supp. 225, 229 (D.Md. 1981).
The standard created by this statute is a new one, not in
line with either the common law exceptions to the American rule
restricting the award of attorneys' fees, or
other statutory standards allowing fee awards in certain cases
against the United States. It was intended to serve as a
"middle ground" between an automatic award of fees to a
successful party and permitting fees only where the
government's position was arbitrary or frivolous.
H.Rep.No.96-1418, supra at 4993. The standard was
elucidated at some length by the committee report:
The test of whether or not a Government action
is substantially justified is essentially one of
reasonableness. Where the Government can show that
its case had a reasonable basis both in law and in
fact, no award will be made . . .
Certain types of case dispositions may indicate
that the Government action was not substantially
justified. A court should look closely at cases,
for example where there has been a judgment on the
pleadings or where there is a directed verdict or
where a prior suit on the same claim had been
dismissed. Such cases clearly raise the
possibility that the Government was unreasonable
in pursuing the litigation.
The standard, however, should not be read to
raise a presumption that the Government position
was not substantially justified, simply because it
lost the case. Nor, in fact, does the standard
require the Government to establish that its
decision to litigate was based on a substantial
probability of prevailing. Furthermore, the
Government should not be held liable where
"special circumstances would make an award
unjust." This "safety valve" helps to insure that
the Government is not deterred from advancing in
good faith the novel but credible extensions and
interpretations of the law that often underlie
vigorous enforcement efforts. H.Rep.No.96-1418,
supra at 4989-4990.
See also Alspach, 527 F. Supp. at 228-229 (holding that
the Act focuses on the government's position in the litigation,
not the underlying action by the agency being challenged). The
standard falls in between the common law "bad faith" exception
and an automatic award of attorney's fees to prevailing
In the instant case we find the government's position was not
substantially justified. Plaintiff was successful on a motion
for summary judgment and the government's position was found to
be erroneous as a matter of law. As noted in our decision of
August 14, even the Administrative Law Judge, who ruled against
the plaintiff, recognized that his decision placed plaintiff in
a "never-never land" and created a "Catch-22" with respect to
plaintiff's tax status. There was nothing novel or innovative
in the government's position; it argued that the plaintiff
should be classified as a contractual service employee despite
the fact that no such category existed at the time plaintiff
rendered the services for which he was compensated. For the
reasons more fully stated in our original opinion, see
Berman v. Schweiker, supra, slip op. at 5-10, we find the
factual and legal basis for defendant's position was not
"substantially justified". Accordingly, an award of attorney's
fees is appropriate in this case.
Defendant contests the inclusion of $855.50 in the fee
application for the cost of services provided by a law student.
The cases are split on whether a law student's services are
recoverable under analogous statutes. Compare Bolden v.
Pennsylvania State Police, 491 F. Supp. 958 (E.D.Pa. 1980)
(recovery allowed under 42 U.S.C. § 1988 (1976)), with
Scheriff v. Beck, 452 F. Supp. 1254 (D.Colo. 1978)
(recovery denied under same statute). The Act authorizes an
award of "reasonable fees and expenses of attorneys." 28 U.S.C. § 2412(b).
The application states that counsel's firm actually paid the
second year law student who worked on this case $14.00 per hour
for his services. We believe these payments constitute
reasonable expenses of counsel. Moreover, denying compensation
for a student law clerk would be counter-productive. As
plaintiff's counsel points out, law firms frequently employ
student law clerks to perform tasks under attorney supervision
as one way of controlling the spiralling costs of litigation.
Excluding compensation for fees incurred by employing student
law clerks will force attorneys to handle the
entire case themselves, achieving the same results but at a
much higher cost.
Finally, the government argues that plaintiff's attorney
accepted appointment as counsel in this case on the explicit
understanding that he would not be entitled to legal fees. The
court's letter of appointment, which the government points to,
merely stated that because this case would create no fund
recovery, no fees would be available under the statutes that
existed at the time. (See October 20, 1980 letter from Judge
Marshall to Lawrence P. Bemis, Esq.). This letter was not
meant, and should not be read, to preclude an award of fees
under a subsequently effective statute intended by Congress to
apply to cases such as this one.
The government does not otherwise contest the reasonableness
of the time claimed or the rate charged by counsel and we
believe they are both reasonable and appropriate. We therefore
find plaintiff's counsel entitled to judgment for fees and
expenses in this case in the amount of $2,310.50. Judgment will
enter in favor of Lawrence P. Bemis and against the United
States of America in the amount of $2,310.50 and costs.