28 U.S.C. § 636(c)(4). See also FED. R. CIV. P. 73(d).
A. Equal Access to Justice Act
The EAJA requires a court to award fees and other expenses to a prevailing party in litigation against the United States, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust. 28 U.S.C. § 2412(d)(1)(A). Under the EAJA, the government bears the burden of proving that its position was substantially justified. Marcus v. Shalala, 17 F.3d 1033, 1036 (7th Cir. 1994) (citing Cummings v. Sullivan, 950 F.2d 492, 495 (7th Cir. 1991)).
The United States' position is substantially justified if it is "'justified in substance or in the main -- that is, justified to a degree that could satisfy a reasonable person.'" Marcus, 17 F.3d at 1036 (quoting Pierce v. Underwood, 487 U.S. 552, 565, 108 S. Ct. 2541, 2550, 101 L. Ed. 2d 490 (1988)). Moreover, "'... [a] position can be substantially justified even though it is not correct, and we believe that it can be substantially justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.'" Marcus, 17 F.3d at 1036 (quoting Pierce, 487 U.S. at 566 n.2, 108 S. Ct. at 2550 n.2).
The "position of the United States" includes the underlying agency action as well as the agency's litigation position. Marcus, 17 F.3d at 1036 (citing 28 U.S.C. § 2412(d)(2)(D)). Thus, in making its determination whether or not to award fees and expenses to the prevailing party, the court considers both "the government's litigating position as well as its prelitigation conduct -- the action or inaction that gave rise to the litigation." Marcus, 17 F.3d at 1036 (citing Cummings, 950 F.2d at 496).
The court may award EAJA fees if either the government's prelitigation conduct or its litigation position is not substantially justified. Marcus, 17 F.3d at 1036 (citing McDonald v. Secretary of Health and Human Services, 884 F.2d 1468, 1476 (1st Cir. 1989)). However, the court makes only one determination for the entire action, encompassing both the prelitigation and litigation conduct of the government. Marcus, 17 F.3d at 1036 (citing Comm'r, Immigration and Naturalization Serv. v. Jean, 496 U.S. 154, 159, 110 S. Ct. 2316, 2319, 110 L. Ed. 2d 134 (1990)). A decision by an administrative law judge is part of the agency's prelitigation conduct. Cummings, 950 F.2d at 497.
In this case, the magistrate judge did not discuss the foregoing law or fully explain why he chose not to award fees to Sutton under the EAJA. The magistrate judge stated:
Notwithstanding the findings above [remanding the case to the administrative law judge who denied disability benefits to Sutton], the Court finds that the Commissioner's position was substantially justified. It is quite possible that, upon remand, the [administrative law judge] could arrive at the same conclusion after further proceedings in accordance with the Court's directives. Plaintiff's request for attorneys' fees is denied.