U.S. Court of Claims Awards Nearly $4 Million in Attorneys’ Fees Against United States in Veterans Benefits Class Action

On July 26, 2016, Judge Margaret Sweeney in the United States Court of Federal Claims awarded $3,862,924.53 in legal fees and expenses to Plaintiff’s lawyers from Morgan, Lewis & Bockius and the National Veterans Legal Services Program.  In 2008, the Plaintiffs’ attorneys filed a pro bono suit contending that about 2100 veterans separated due to Post Traumatic Stress Disorder related to service in Iraq and Afghanistan were unlawfully assigned disability ratings of less than 50 percent.   The court certified the class in late 2009 and the parties engaged in protracted settlement discussions until ultimately settlement was reached in July 2011.

While the settlement was being implemented, Plaintiffs’ attorneys submitted an application for attorneys’ fees and expenses under the Equal Access to Justice Act (EAJA), a federal statute authorizing payment of such fees by the government to successful litigants.  Enacted in 1980, EAJA was designed, on part, to level the playing field between the average citizen and a federal government with vast litigation resources.  For many military and veterans law practitioners, EAJA makes it possible to litigate cases for Plaintiffs who could not otherwise afford an attorney.  

To be entitled to EAJA fees, litigants must first demonstrate they are a “prevailing party,” which not always clear especially in cases such as this where the parties voluntarily agreed to settle the matter and the Court did not, for instance, enter judgment on the parties’ dispositive motions.   If the EAJA applicant can demonstrate he is a prevailing party, the burden shifts to the government to prove that “the position of the United States was substantially justified.”  The substantial-justification inquiry presents the largest area of dispute as there are no particular objective factors for courts to apply.   As the Supreme Court has noted, it is a “multifarious and novel question, little susceptible . . . of useful generalization . . . .”  Pierce v. Underwood, 487 U.S. 552, 562 (1988).  In short, there is a lot of room to argue and precedent in most jurisdictions bears this out.

EAJA applications often beget additional rounds of briefing and litigation and this case was no different.  The government advanced numerous arguments disputing the Plaintiffs’ entitlement to fees and expenses but ultimately the Court found them unavailing.  Judge Sweeney held that, even though the parties voluntarily settled the case, Plaintiffs were nonetheless prevailing parties within the meaning of the statute.  The Court further rejected numerous arguments by Government that both its pre-litigation and litigation positions were not substantially justified.  Having concluded that the Plaintiffs met the requirements for EAJA fees, the Court approved the massive, nearly $4 million award. 

On September 20, 2016, the Government appealed the decision to the United States Court of Appeals for the Federal Circuit.  I will continue to monitor the case.