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No. 05-762

In the Supreme Court of the United States

MONROE WHITE, SR., PETITIONER

v.

R. JAMES NICHOLSON,
SECRETARY OF VETERANS AFFAIRS

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR RESPONDENT IN OPPOSITION

PAUL D. CLEMENT
Solicitor General
Counsel of Record
PETER D. KEISLER
Assistant Attorney General
DAVID M. COHEN
TODD M. HUGHES
RONALD G. MORGAN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

QUESTION PRESENTED

Whether the court of appeals correctly determined that the United States Court of Appeals for Veterans Claims did not abuse its discretion in denying attorney's fees under the Equal Access to Justice Act, 28 U.S.C. 2412(d), based on a finding that the position of the Secretary of Veterans Affairs was substantially justified in the administrative and litigation phases of this case.

In the Supreme Court of the United States

No. 05-762

MONROE WHITE, SR., PETITIONER

v.

R. JAMES NICHOLSON,
SECRETARY OF VETERANS AFFAIRS

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

BRIEF FOR RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-11) is reported at 412 F.3d 1314. The opinion of the Court of Appeals for Veterans Claims denying an award of at torney's fees (Pet. App. 12-14) is unreported. The un derlying opinion of the Court of Appeals for Veterans Claims upon which the fee application is based (Pet. App. 15-19) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on June 16, 2005. A petition for rehearing was denied on September 13, 2005 (Pet. App. 20). The petition for a writ of certiorari was filed on December 9, 2005. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Petitioner filed a claim seeking service connection for a lower back injury. Pet. App. 2. On October 3, 2002, the Board of Veterans Appeals (Board) denied peti tioner's claim, finding that petitioner's lower back injury was not incurred in, or aggravated by, his service. Id. at 2, 15-16. In reaching that conclusion, the Board consid ered additional evidence that had not been first consid ered by a Department of Veterans Affairs (VA) regional office. Id. at 16. At that time, regulations promulgated by the VA authorized the Board to "undertake the action essential for a proper appellate decision" when "further evidence, clarification of the evidence, correction of a procedural defect, or any other action is necessary for a proper appellate decision." 38 C.F.R. 19.9(a)(2) (2002). Under those regulations, the Board was not required to refer the additional evidence to the regional office for initial review or to seek the appellant's waiver of re gional office review. 38 C.F.R. 20.1304 (2002). Peti tioner appealed to the United States Court of Appeals for Veterans Claims (CAVC), arguing, inter alia, that the medical evidence did not support the Board's find ing. Pet. App. 15-16.

2. While petitioner's appeal was pending before the CAVC, the United States Court of Appeals for the Fed eral Circuit issued a decision in a separate, unrelated case entitled Disabled American Veterans (DAV) v. Sec retary of Veterans Affairs, 327 F.3d 1339 (Fed. Cir. 2003). In that case, the Federal Circuit held that "38 C.F.R. § 19.9(a)(2) is invalid because, in conjunction with the amended rule codified at 38 C.F.R. § 20.1304, it al lows the Board to consider additional evidence without having to remand the case to the [regional office] for initial consideration and without having to obtain the appellant's waiver." DAV, 327 F.3d at 1341. The perti nent statute provided that "[a]ll questions in a matter which . . . is subject to decision by the Secretary shall be subject to one review on appeal to the Secretary." Id. at 1341-1342 (quoting 38 U.S.C. 7104(a)). In addition, the statute provided that "final decisions on such appeals are made by the Board." Id. at 1342 (citing 38 U.S.C. 7104). In the court of appeals' view, the regulations did not satisfy those requirements:

When the Board obtains evidence that was not con sidered by the [regional office] and does not obtain the appellant's waiver, * * * an appellant has no means to obtain "one review on appeal to the Secre tary," because the Board is the only appellate tribu nal under the Secretary.

Id. at 1347. The court of appeals therefore concluded that the regulation was contrary to the expressed intent of Congress, and invalidated it under the first step of the analysis set forth in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).

3. Petitioner asked the CAVC to remand his case "for the Board to comply with Disabled American Veter ans." Pet. App. 17. The "Secretary concede[d] that the Board did not obtain from appellant a waiver of [re gional office] consideration of the additional evidence obtained by the Board." Ibid. The CAVC vacated the Board's decision and "remand[ed] the matter to the Board for readjudication consistent with Disabled American Veterans v. Sec'y of Veterans Affairs, 327 F.3d 1339, 1341 (Fed. Cir. 2003)." Id. at 18.

4. Petitioner filed an application with the CAVC for an award of attorney's fees pursuant to the Equal Ac cess to Justice Act (EAJA), 28 U.S.C. 2412(d). Pet. App. 12. The EAJA authorizes the court to award reasonable attorney's fees to a qualifying "prevailing party" in cer tain civil actions "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).

The CAVC denied petitioner's application. Pet. App. 12-14. The CAVC found that "even assuming that the remand in the underlying case was predicated on admin istrative error and that [petitioner] is a prevailing party, his application must be denied because the Secretary's position at the administrative and litigation stages was substantially justified." Id. at 13 (citation omitted).

The CAVC based its substantial justification finding on three of its prior decisions in which it had denied EAJA fee applications, each involving a remand that was caused by a court's invalidation of a regulation. Pet. App. 13-14 (citing Johnson v. Principi, 17 Vet. App. 436 (2004); Ozer v. Principi, 16 Vet. App. 475 (2002); Felton v. Brown, 7 Vet. App. 276 (1994)). In one of the prior cases, Johnson v. Principi, supra, the CAVC had con sidered, and denied, an EAJA application based on a remand for compliance with the decision in DAV. In Johnson, the CAVC had concluded that the Secretary's reliance on the invalidated regulations was substantially justified because DAV "was [a] case of first impression and there had been no prior adverse reaction to applica tion of [38 C.F.R.] § 19.9(a)(2) [and] it could not be said that [the] Secretary was unreasonable in promulgating [the] regulation." Pet. App. 13 (citing Johnson, 17 Vet. App. at 439-442). The CAVC found that "the circum stances of [petitioner's] case as to substantial justifica tion warrant the same result as in Johnson." Id. at 14.

5. The court of appeals affirmed. Pet. App. 1-11. The panel majority held that the CAVC had applied the proper burden of proof in concluding that the Secre tary's position was substantially justified. Id. at 2. Be cause "[t]he fact that one court agreed or disagreed with the Government does not establish whether or not its position was substantially justified," id. at 4 (quoting Pierce v. Underwood, 487 U.S. 552, 569 (1988)), the court of appeals held that "[i]n order for the Govern ment to be deemed unjustified in enforcing a regula tion," "it is not enough for a regulation to be deemed facially invalid on the basis of contradicting the over arching legislation," ibid. Instead, the inquiry into "substantial justification" must focus on "the totality of the circumstances" surrounding the government's posi tion. Pet. App. 7.

Considering the totality of the circumstances in this case, and the "virtually identical facts" considered in Johnson v. Principi, supra, the court of appeals con cluded that there was no reason to "differ from the per suasive reasoning of Johnson." Pet. App. 6-7. The CAVC had not abused its discretion in concluding that "the Government met its burden of demonstrating that the Secretary's position at the administrative and litiga tion levels was substantially justified." Id. at 8.

The dissenting judge concluded that the decision of the CAVC was flawed because it failed to consider the "significance of the unambiguous language of a control ling statute." Pet. App. 9-10. Because the Secretary had promulgated a regulation that contravened the spe cific language of the statute, the dissenting judge stated that "the government bears a heavy burden to * * * prove that its position was 'substantially justified' based on the invalid regulation" and concluded that the Secre tary's conduct was not substantially justified. Id. at 11.

ARGUMENT

The court of appeals correctly held that the CAVC did not abuse its discretion in concluding that the Secre tary's position was substantially justified. Further re view is not warranted.

1. Petitioner cannot obtain fees under the EAJA because he has not established that he was a "prevailing party." 28 U.S.C. 2412(d)(1)(A). To obtain "prevailing party" status, "a party must receive 'at least some relief on the merits of his claim.'" Vaughn v. Principi, 336 F.3d 1351, 1356-1357 (Fed. Cir. 2003) (quoting Buckhannon Bd. & Care Home, Inc. v. West Va. Dep't of Health & Human Res., 532 U.S. 598, 603 (2001)). A suc cessful motion for remand does not meet that standard when it is not "predicated upon administrative error." Sumner v. Principi, 15 Vet. App. 256, 264 (2001), aff'd sub nom. Vaughn v. Principi, 336 F.3d 1351 (Fed. Cir. 2003). "In order for a remand to have been predicated upon administrative error, the remand must have been either (1) directed in a Court opinion, decision, or order that contained a Court recognition of administrative error or (2) granted on the basis of a concession of error by the Secretary." Johnson v. Principi, 17 Vet. App. 436, 439 (2004) (citing cases). A remand "based on the retroactive application of the Federal Circuit's decision in DAV v. Sec'y * * * [is] not a remand based on adminis trative error" where, as here, the court's remand order "neither directed VA to award benefits * * * nor indi cated that remand was based on either a 'Court recogni tion of administrative error' or the Secretary's 'conces sion of error.'" Ibid.

2. Petitioner also cannot obtain fees under the EAJA because the CAVC did not abuse its discretion in concluding that the Secretary's position was substan tially justified. Petitioner contends (Pet. 11-13) that the court of appeals erred by adopting a so-called "Johnson rule" in this case which, according to petitioner, autho rizes a "finding of substantial justification based on nothing more than absence of prior case law." That con tention misstates the standard applied by the CAVC and the court of appeals in this case and by the CAVC in the Johnson case, which "centers the inquiry for a substan tial justification on the 'totality of the circumstances.'" Pet. App. 6-7 (quoting Johnson, 17 Vet. App. at 440). Under the totality of the circumstances standard, "whether a case is one of first impression is only one factor for the court to consider." Felton v. Brown, 7 Vet. App. 276, 281 (1994).

"Where, as here, an appellant alleges that the Secre tary's position was not substantially justified, the Secre tary has the burden to prove that his position was sub stantially justified at both the administrative and litiga tion phases." Johnson, 17 Vet. App. at 440 (citing cases). "[S]ubstantially justified" means "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565 (1988). "[T]he govern ment's failure to prevail does not raise a presumption that its position was not substantially justified." Felton v. Brown, 7 Vet. App. 276, 280 (1994) (quoting Kali v. Bowen, 854 F.2d 329, 332 (9th Cir. 1988)). Instead, whether the government's position was substantially justified is determined "based upon the totality of the circumstances, including merits, conduct, reasons given, and consistency with judicial precedent and VA policy with respect to such position, and action or failure to act, as reflected in the record on appeal and the filings of the parties before the Court." Ozer v. Principi, 16 Vet. App. 475, 476 (2002) (quoting Stillwell v. Brown, 6 Vet. App. 291, 302 (1994)). Also relevant to the inquiry is whether the case was "one[] of first impression involving good faith arguments of the government that are eventually rejected by the Court." Johnson, 17 Vet. App. at 440 (quoting Stillwell, 6 Vet. App. at 303). The decision of the lower court regarding substantial justification is reviewed under an abuse of discretion standard. Halverson v. Slater, 206 F.3d 1205, 1208 (D.C. Cir. 2000) (citing Pierce, 487 U.S. at 563).

In this case, as the court of appeals concluded, the CAVC appropriately applied the "totality of the circum stances" standard in determining that "the Secretary's position at the administrative and litigation levels was substantially justified." Pet. App. 8. With respect to the administrative level, "in a case in which the Secretary's regulation has been invalidated," the Secretary must show substantial justification "both in promulgating the regulation and in his position during adjudication of the claim before the agency." Ozer, 16 Vet. App. at 477 (cit ing Felton, 7 Vet. App. at 283).

Here, the regulations were reasonably promulgated as part of an effort "to shorten appeal processing time and to reduce the backlog of claims awaiting decision." Johnson, 17 Vet. App. at 441 (quoting 66 Fed. Reg. 40,942 (2001)). Although the statutory language re quired that "[a]ll questions in a matter * * * shall be subject to one review on appeal to the Secretary," 38 U.S.C. 7104(a), it did not state that all evidence relating to those questions needed to be considered first by the regional office. Therefore, there was a reasonable basis for arguing that the Secretary could, in compliance with the statute, "improve the efficiency of the review on ap peal to the Secretary" by allowing "the Board to obtain evidence, clarify the evidence, cure procedural defect, or perform any other action essential for a proper appellate decision in any appeal properly before it." Disabled American Veterans (DAV) v. Secretary of Veterans Af fairs, 327 F.3d 1339, 1342, 1346 (Fed. Cir. 2003). That is particularly true in light of the fact that the Board was expressly authorized by statute to "secure an advisory medical opinion from one or more independent medical experts who are not employees of the Department" when "in the judgment of the Board, expert medical opinion, in addition to that available within the Depart ment, is warranted by the medical complexity or contro versy involved in an appeal case." 38 U.S.C. 7109(a).

The regulations were the subject of notice-and-com ment rulemaking, and the VA did not receive any com ments objecting to the proposed new rule on the ground that it was inconsistent with the "one review on appeal" language of 38 U.S.C. 7104(a). See Board of Veterans' Appeals: Obtaining Evidence and Curing Procedural Defects Without Remanding, 67 Fed. Reg. 3099 (2002). As a result, the validity of the regulations in light of 38 U.S.C. 7104(a)'s appeal requirement "had not been ques tioned until several veterans organizations had filed with the Federal Circuit a petition for review" of the regulation in DAV. Johnson, 17 Vet. App. at 442. Un der those circumstances, the CAVC and the court of ap peals correctly concluded that the Secretary's promulga tion of the regulation was substantially justified. Pet. App. 6-7 (citing Johnson, 17 Vet. App. at 442).

The Board's application of the regulation to peti tioner's administrative case was also substantially justi fied because the Board was "bound by law to apply the regulation to the [petitioner]'s claim." Ozer, 16 Vet. App. at 478 (citing Fugere v. Derwinski, 1 Vet. App. 103, 110 (1990)). "Given the existence of the regulation, whose validity had not yet been questioned in this case, the Secretary's position during this part of the adminis trative phase was also substantially justified." Felton, 7 Vet. App. at 284.

With respect to the litigation phase of the case, the Secretary's position before the CAVC was also substan tially justified. When the Secretary successfully moves for remand, or cooperates with a successful request for remand, after a regulation is invalidated, the Secretary's litigation position is "substantially justified." Johnson, 17 Vet. App. at 442 (citing Wisner v. West, 12 Vet. App. 330, 334 (1999); Stillwell, 6 Vet. App. at 302).

For those reasons, the court of appeals correctly con cluded that the CAVC properly applied the totality of the circumstances standard "based on the whole record, including relevant statutory law," Pet. App. 8, and did not abuse its discretion in holding that the Secretary's position at the administration and litigation levels was substantially justified. That fact-bound, case-specific conclusion does not warrant further review by this Court.

3. Petitioner also contends (Pet. 11-15) that the deci sion below conflicts with decisions of the Seventh and D.C. Circuits. That argument lacks merit because, con trary to petitioner's assertion (Pet. 13), the court of ap peals applied the same totality of the circumstances ap proach in this case that was applied by the Seventh Cir cuit in Marcus v. Shalala, 17 F.3d 1033 (7th Cir. 1994), and by the D.C. Circuit in Halverson v. Slater, supra.

In Marcus and Halverson, as here, a regulation had been invalidated under the first step of the analysis set forth in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), on the ground that it conflicted with the unam biguously expressed intent of Congress. Halverson, 206 F.3d at 1207; Marcus, 17 F.3d at 1035. In the ensuing EAJA fee litigation, the courts of appeals considered whether, in spite of the particular merits decision, the government's position was substantially justified. In Halverson, the government's position was not substan tially justified because the statute explicitly authorized the Secretary of Transportation to delegate certain pi lotage duties to the United States Coast Guard, but the regulation instead purported to delegate those duties to the St. Lawrence Seaway Development Corporation. 206 F.3d at 1206-1207, 1211. Noting that the relevant question under EAJA was "whether the Department's position, though rejected, was substantially justified" (id. at 1209), the court concluded that it was not, because the government's position had been found "entirely without merit" based on an "elementary application" of basic canons of construction, leaving "no persuasive rea son for believing that this was an issue over 'which rea sonable minds could differ.'" Id. at 1211 (citation omit ted).

In Marcus, the court concluded that the govern ment's positions were not substantially justified because "six other circuits * * * had [previously] rejected the Sec retary's position" and "the Secretary's position was 'un convincing,' and 'make[s] little sense.'" 17 F.3d at 1038 (citations omitted). In light of that litigation history, the issues were not "close ones," and the court of appeals concluded that the district court did not abuse its discre tion in deeming the government's positions to lack sub stantial justification. Ibid.

Here, as in Halverson and Marcus, a totality of the circumstances approach was followed. The result was different because the underlying merits decision was not "easy," as in Halverson, 206 F.3d at 1212, and because the underlying question was one of first impression as to which reasonable minds could disagree, unlike Marcus. Contrary to petitioner's submission (Pet. 11), therefore, there is no "division among the Federal Courts of Appeals." Further review is not warranted.

4. Petitioner finally contends (Pet. 16) that the court of appeals erred in finding substantial justification be cause "[w]hen the underlying merits issue is the validity of a regulation * * * the determination of reasonableness cannot be divorced from the Chevron analysis in the merits litigation, at least when the regulation is invali dated under Chevron's step one." That argument is con trary to this Court's precedents.

This Court has made clear that "a position can be justified even though it is not correct, and * * * it can be substantially (i.e., for the most part) justified if a rea sonable person could think it correct, that is, if it has a reasonable basis in law and fact." Pierce, 487 U.S. at 566 n.2. "Congress did not * * * want the 'substantially justified' standard to 'be read to raise a presumption that the Government position was not substantially jus tified simply because it lost the case.'" Scarborough v. Principi, 541 U.S. 401, 415 (2004) (quoting H.R. Rep. No. 1005, 96th Cong., 2d Sess. Pt. 1, at 10 (1980)).

Therefore, the determination of the "substantial jus tification" of the government's position "may not be col lapsed into [the] antecedent evaluation of the merits." Cooper v. United States R.R. Ret. Bd., 24 F.3d 1414, 1416 (D.C. Cir. 1994); see Kiareldeen v. Ashcroft, 273 F.3d 542, 554 (3d Cir. 2001); United States v. Paisley, 957 F.2d 1161, 1167 (4th Cir.), cert. denied, 506 U.S. 822 (1992); Welter v. Sullivan, 941 F.2d 674, 676 (8th Cir. 1991); Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. United States, 837 F.2d 465, 467 (Fed. Cir. 1988). "[A] court cannot assume that the government's position was not substantially justified simply because the government lost on the merits." Morgan v. Perry, 142 F.3d 670, 685 (3d Cir. 1998), cert. denied, 525 U.S. 1070 (1999); see Dantran, Inc. v. United States Dep't of Labor, 246 F.3d 36, 40-41 (1st Cir. 2001).

Petitioner has pointed to no case in which a court of appeals has held categorically that the invalidation of a regulation at step one of the Chevron analysis necessar ily requires a finding of no substantial justification. To the contrary, in Halverson, the D.C. Circuit "em phasize[d] that [it did] not rel[y] solely on the fact that the merits panel resolved this case on Chevron step one grounds," noting that "other Chevron step one cases have presented quite difficult issues and involved 'sub stantially justified' arguments on both sides," 206 F.3d at 1211. Similarly, in FEC v. Political Contributions Data, Inc., 995 F.2d 383, 387 (1993), cert. denied, 510 U.S. 1116 (1994), the Second Circuit explained that "[w]e come to this conclusion not because the government lost its claim, but because a previous panel of this court de termined that the statutory language and legislative history were clear." See ibid. (describing its holding as predicated on "this unusual situation where a previous panel has specifically passed on every question before us, and has found the Commission's position to have been unreasonable in that it frustrated the intent of Congress and might jeopardize first amendment rights"). Thus, far from adopting the categorical rule advocated by petitioner (Pet. 18), each court of appeals properly limited its substantial justification decision to the circumstances of the particular case. FEC, 995 F.2d at 387; Halverson, 206 F.3d at 1212.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

PAUL D. CLEMENT
Solicitor General
PETER D. KEISLER
Assistant Attorney General
DAVID M. COHEN
TODD M. HUGHES
RONALD G. MORGAN
Attorneys

FEBRUARY 2006