FILED
United States Court of Appeals
Tenth Circuit
December 20, 2007
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
JANET C. MANNING,
Plaintiff-Appellant,
No. 06-7127
v.
MICHAEL J. ASTRUE, *
Commissioner, Social Security
Administration,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D.C. No. 04-CV-21-SPS)
Submitted on the briefs: **
Richmond J. Brownson, Timothy M. White, Tulsa, Oklahoma, for
Plaintiff-Appellant.
Peter D. Keisler, Assistant Attorney General; William Kanter, Michael E.
Robinson, Attorneys, Appellate Staff, Civil Division, Department of Justice,
Washington, D.C. (Sheldon J. Sperling, United States Attorney, Muskogee,
Oklahoma, of Counsel) for Defendant-Appellee.
*
Pursuant to Fed. R. App. P. 43(c)(2), Michael J. Astrue is substituted for
Jo Anne B. Barnhart as appellee in this appeal.
**
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Before HENRY and ANDERSON, Circuit Judges, and BRORBY, Senior Circuit
Judge.
ANDERSON, Circuit Judge.
Janet C. Manning appeals the district court’s denial of a Fed. R. Civ. P. 60
motion requesting that the court either set aside an administrative offset to an
award of attorney’s fees the court made to her under the Equal Access to Justice
Act (EAJA), 28 U.S.C. § 2412(d), or, alternatively, amend the fee order to award
the EAJA fees to her counsel. The very narrow issues before us on appeal are
(1) whether the EAJA attorney’s fees award should have been paid to
Ms. Manning or to her attorney in the first instance and (2) if the fees were
properly paid to Ms. Manning, are those fees subject to administrative offset
under the Debt Collection Improvement Act of 1996, 31 U.S.C. § 3716, for
student loan debts owed by Ms. Manning to the United States Department of
Education. Because we conclude the district court properly made the attorney’s
fees award to Ms. Manning and that award was subject to administrative offset for
her unpaid student loan debts, we affirm.
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BACKGROUND
The district court 1 reversed the Commissioner’s denial of supplemental
security income (SSI) benefits to Ms. Manning and remanded for further
proceedings. Ms. Manning then moved in that court for an award of attorney’s
fees to her counsel of $5,958.30 under the EAJA. The Commissioner did not
object, and the district court awarded the fees, ordering payment to Ms. Manning
as the prevailing party. In addition, the court ordered that if Ms. Manning’s
attorney were awarded any fees pursuant to 42 U.S.C. § 406(b)(1), which permits
payment of fees to an attorney out of past due benefits, the attorney must refund
the smaller amount to her pursuant to Weakley v. Bowen, 803 F.2d 575, 580
(10th Cir. 1986).
Thereafter, the Social Security Office of the General Counsel notified
Ms. Mannings’ attorney that the district court had ordered the Social Security
Administration to pay attorney’s fees in the amount of $5,958.30 under the EAJA
and that he would “soon receive a check payable to Janet C. Manning and
Timothy White and Associates c/o Richmond Brownson, in accordance with the
[district court’s order].” Aplt. App. at 58. Counsel, however, received a United
States treasury check made payable to “Janet Manning c/o Timothy White &
1
The parties agreed that the magistrate judge would conduct all proceedings
in this case. Thus, we refer to the proceedings before and the decision of the
magistrate judge as before and by the district court.
-3-
Associates” in the amount of $3,992.18. Id. at 59. Under the authority of the
Debt Collection Improvement Act of 1996, the United States had administratively
offset the EAJA award by $1,966.12, an amount Ms. Manning owed to the United
States Department of Education on an outstanding school loan debt. 2
Ms. Manning’s counsel then moved the district court, on his own behalf,
either to set aside the alleged wrongful administrative offset or to correct, under
Fed. R. Civ. P. 60(a), the alleged clerical error of awarding attorney’s fees
directly to Ms. Manning rather than to her attorney. Aplt. App. at 38. Counsel
argued that the offset should be set aside because (1) EAJA fees are income to
counsel; (2) the Debt Collection Improvement Act permits administrative offset
from disability benefits, but does not specifically mention administrative offset
from EAJA fees; (3) counsel has a de facto lien against the fees that should
receive priority over any claim by the government; and (4) under Weakley,
803 F.2d at 580, if a claimant later receives disability benefits resulting in the
claimant’s attorney being awarded fees under § 406(b)(1), then the attorney must
refund the smaller of the EAJA or the § 406(b)(1) fees to the claimant, thereby
suggesting that the intent of the EAJA is to compensate counsel.
In addition to filing the motion, counsel contacted the Department of
Education to resolve this matter administratively. The Department initially
indicated that it was in the process of refunding the offset monies. Aplt. App. at
2
Ms. Manning has never disputed having an unpaid student loan debt.
-4-
63. Later, however, the Department changed course and determined it would not
refund the offset. After efforts to resolve the matter administratively failed, the
Commissioner stipulated that the district court’s order should be corrected to
award attorney’s fees to Ms. Manning’s attorney. The court declined to honor the
stipulation, however. The court first decided that the motion should have been
made pursuant to Rule 60(b)(1), rather than Rule 60(a), because there was no
clerical error as the court had intended to award attorney’s fees to Ms. Manning,
the prevailing party, and not to her attorney. Construing the motion as filed under
Rule 60(b)(1), the court denied relief, finding that under the clear language of
28 U.S.C. § 2412(d)(1)(A), the EAJA payment was properly made to
Ms. Manning, the prevailing party, and not to her attorney. The court reasoned
that to ignore the clear statutory language and to award fees directly to
Ms. Manning’s attorney to circumvent the offset would
summarily decide [unresolved] disputes not properly before the
Court: (i) whether the United States may legally assert an offset
against fees awarded to the Plaintiff under the EAJA; (ii) whether the
Plaintiff’s attorney has an enforceable lien on the EAJA fee award
arising out of his contract with the Plaintiff; and, (iii) whether any
attorney’s lien has priority over the government’s right of offset.
Aplt App. at 76-77 (citation omitted). Ms. Manning appealed.
-5-
ANALYSIS
I. What is the Scope of this Appeal?
In this section, we set forth the issues that are the basis for this appeal and
discuss why we are not addressing other issues raised on appeal by Ms. Manning.
As indicated above, we confine our disposition to the following two issues:
(1) whether attorney’s fees under the EAJA are payable to Ms. Manning or to her
attorney and (2) if the attorney’s fees are payable to Ms. Manning, whether the
fees may be offset under the Debt Collection Improvement Act for an outstanding
student loan debt owed by Ms. Manning to the Department of Education. The
first issue was raised in the district court by Ms. Manning and later by her counsel
on his own behalf and by his own motion. The district court, as indicated above,
addressed this issue, ruling on it adversely to counsel. The second issue was not
ruled on by the district court. Ms. Manning raises the issue on appeal, however,
and the Commissioner responds, arguing that any EAJA award to Ms. Manning is
subject to offset. While technically we could avoid deciding this issue because it
was not ruled on by the district court, we choose to consider it for two reasons:
(1) because the district court held that the fee award was to Ms. Manning as the
prevailing party, the court effectively held that the debt could be offset and
(2) the first and second issues are intertwined, making it advisable to address the
second issue.
Ms. Manning also argues on appeal that counsel “probably” has an
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enforceable lien on the EAJA fee award with priority over the government. Aplt.
Br. at 26. This argument was not adequately raised or briefed in the district court
and was not ruled on by that court. Due to the insufficient development in the
district court, the lack of an adequate record on appeal, and the lack of a district
court ruling, we do not address any issue concerning an attorney’s lien.
Specifically, we decline to address whether an attorney’s lien attached to the
award of attorney’s fees; if a lien attached, how that lien attached; how to enforce
an attached attorney’s lien; how to collect on the attorney’s lien; or whether a lien
would have priority. 3
II. Are the EAJA Attorney’s Fees Payable to Ms. Manning or to Her Attorney?
Ms. Manning does not dispute the district court’s finding that her motion
was properly filed under Rule 60(b). We review the denial of Rule 60(b) relief
for an abuse of discretion. See Zurich N. Am. v. Matrix Serv., Inc., 426 F.3d
1281, 1289 (10th Cir. 2005). Under Rule 60(b)(1), a court may relieve a party
from an order based on “mistake, inadvertence, surprise, or excusable neglect.”
Fed. R. Civ. P. 60(b)(1). A “mistake” may occur if the district court made a
substantive mistake of law in its order. Yapp v. Excel Corp., 186 F.3d 1222, 1231
(10th Cir. 1999).
3
Also, any debts other than student loans are not part of this appeal. For
example, we do not address any questions concerning unpaid child support
payments or creditors’ rights in intervening bankruptcy actions. The resolution of
these issues must be addressed when they arise in an appropriate case with a
proper record.
-7-
Applying these standards, we conclude that there was no mistake
warranting Rule 60(b)(1) relief, and, therefore, the district court did not abuse its
discretion in denying Ms. Manning’s motion. In reaching this conclusion, we
first look to the EAJA statute.
When interpreting the language of a statute, the starting point is
always the language of the statute itself. If the language is clear and
unambiguous, the plain meaning of the statute controls. A statute is
ambiguous when it is capable of being understood by reasonably
well-informed persons in two or more different senses.
McGraw v. Barnhart, 450 F.3d 493, 498 (10th Cir. 2006) (quotation omitted).
The EAJA statute provides that “a court shall award to a prevailing party
other than the United States fees and other expenses . . . incurred by that party in
any civil action . . . , including proceedings for judicial review of agency action,
brought by or 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) (emphasis
added). As the district court found, this statutory language clearly provides that
the prevailing party, who incurred the attorney’s fees, and not that party’s
attorney, is eligible for an award of attorney’s fees. See Gisbrecht v. Barnhart,
535 U.S. 789, 796 (2002) (“Under EAJA, a party prevailing against the United
States in court, including a successful Social Security benefits claimant, may be
awarded fees payable by the United States if the Government’s position in the
litigation was not ‘substantially justified.’”); McGraw, 450 F.3d at 497, 503
-8-
(stating “EAJA award is to the claimant, while counsel receives [the § 406(b)]
award” and EAJA “award is to the claimant, who may or may not tender that
award to counsel, regardless of their agreement”); Phillips v. Gen. Servs. Admin.,
924 F.2d 1577, 1582 (Fed. Cir. 1991) (per curiam) (“As the statute requires, any
[EAJA] fee award is made to the ‘prevailing party,’ not the attorney.”); see also
City of Burlington v. Dague, 505 U.S. 557, 572 (1992) (Blackmun, J., dissenting)
(“The provisions at issue in this case, [the Clean Water Act and the Solid Waste
Disposal Act,] like fee-shifting provisions generally, authorize fee awards to
prevailing parties, not their attorneys.”); Venegas v. Mitchell, 495 U.S. 82, 87
(1990) (“Section 1988 [4] makes the prevailing party eligible for a discretionary
award of attorney’s fees. . . . [I]t is the party, rather than the lawyer, who is . . .
eligible . . . .”); id. at 89 (“[W]e have already rejected the argument that the
entitlement to a § 1988 award belongs to the attorney rather than the plaintiff.”);5
4
In part, 42 U.S.C. § 1988(b) states that “[i]n any action or proceeding to
enforce a provision of sections 1981, 1981a, 1982, 1983, 1985 and 1986 of [title
42], . . . the court, in its discretion, may allow the prevailing party, other than the
United States, a reasonable attorney’s fee as part of the costs.”
5
Congress has enacted numerous fee-shifting statutes awarding fees to
prevailing parties. See, e.g., W. Va. Univ. Hosps., Inc. v. Casey, 499 U.S. 83,
88-89 & n.4 (1991) (listing some fee-shifting statutes), superceded by statute,
Civil Rights Act of 1991, Pub. L. No. 102-166, § 113, 105 Stat. 1071, 1079
(amending § 1988 to permit recovery of expert witness fees). The Supreme Court
has held that legal principles from cases addressing other fee-shifting statutes,
such as § 1988, apply to EAJA cases. See, e.g., Buckhannon Bd. & Care Home,
Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 n.4 (2001)
(continued...)
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Evans v. Jeff D., 475 U.S. 717, 730, 731-32 (1986) (holding in § 1988(b) case that
Congress gave prevailing party statutory eligibility for discretionary award of
attorney’s fees and statute did not bestow fee award on attorney); Weeks v. Indep.
Sch. Dist. No. I-89, 230 F.3d 1201, 1213 (10th Cir. 2000) (relying on case law
addressing attorney’s fees under § 1988 and deciding that “prevailing party”
language in Fed. R. Civ. P. 54(d) refers to party and not to attorney); Turner v.
Sec’y of Air Force, 944 F.2d 804, 808 & n.2 (11th Cir. 1991) (relying on case law
dealing with § 1988 and holding in 42 U.S.C. § 2000e-5(k) case that “[i]t is clear
that the award of attorneys’ fees belongs to the prevailing party, not to the
attorney representing the party”); United States v. Adkinson, 256 F. Supp. 2d
1297, 1318 (N.D. Fla. 2003) (“[T]he [EAJA] fee award belongs to the client, and
an attorney has no independent right to a fee award under the EAJA.”), aff’d,
360 F.3d 1257 (11th Cir. 2004) (per curiam).
In addition to the “prevailing party” language, other parts of the EAJA
statute “affirmatively rule out the attorney as a recognized applicant for fees and
expenses.” Panola Land Buying Ass’n v. Clark, 844 F.2d 1506, 1511 (11th Cir.
5
(...continued)
(recognizing that Court has interpreted fee-shifting provisions consistently);
Indep. Fed’n of Flight Attendants v. Zipes, 491 U.S. 754, 758 n.2 (1989) (“We
have stated in the past that fee-shifting statutes’ similar language is ‘a strong
indication’ that they are to be interpreted alike.”); Hensley v. Eckerhart, 461 U.S.
424, 433 n.7 (1983) (deciding that interpretation of term “prevailing party” in
§ 1988 is “generally applicable in all cases in which Congress has authorized an
award of fees to a ‘prevailing party’”).
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1988). In defining “fees and other expenses,” the EAJA treats attorneys in the
same manner as it treats “expert witnesses, engineers, scientists, analysts, or other
persons found by the court to be” needed to prepare the case. Id.; see also
28 U.S.C. § 2412(d)(2)(A). In addition, the EAJA requires that to apply for fees
and other expenses, the prevailing party must submit an itemized statement from
the attorney or expert stating the time expended and the fee rate. 28 U.S.C.
§ 2412(d)(1)(B). Lastly, the EAJA statute conditions eligibility for attorney’s
fees upon the prevailing party, not the attorney, not having a net worth exceeding
$2,000,000. Id. The EAJA therefore permits attorney’s fees reimbursement to
financially eligible prevailing parties, who make a proper application, and not to
their attorneys.
Although the statutory language alone makes it clear that the prevailing
party and not the attorney may recover an award of attorney’s fees, the legislative
history for the EAJA also makes it clear that certain prevailing parties, and not
their attorneys, may recover attorney’s fees when the government’s action was not
substantially justified. See H.R. Rep. No. 96-1418, at 5-6 (1980), reprinted in
1980 U.S.C.C.A.N. 4984, 4984. The EAJA
rests on the premise that certain individuals . . . may be deterred
from seeking review of . . . unreasonable governmental action
because of the expense involved in securing the vindication of their
rights. The economic deterrents to contesting governmental action
are magnified in these cases by the disparity between the resources
and expertise of these individuals and their government. The
purpose of the bill is to reduce the deterrents and disparity by
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entitling certain prevailing parties to recover an award of attorney
fees, expert witness fees and other expenses against the United
States, unless the Government action was substantially justified.
Id. This statement of purpose directly addresses the question whether the EAJA
fees are for the claimant or for the claimant’s attorney and clearly states that the
fees are for the claimant. See Panola Land Buying Ass’n, 844 F.2d at 1511
(noting that federal fee statutes were not “enacted for the benefit of the Bar” but
“for the benefit of the persons the statutes are designed to reach”). “[T]he
specific purpose of the EAJA is to eliminate for the average person the financial
disincentive to challenge unreasonable governmental actions.” Comm’r v. Jean,
496 U.S. 154, 163 (1990) The EAJA therefore was not enacted for the benefit of
counsel to ensure that counsel gets paid. Panola Land Buying Ass’n, 844 F.2d at
1511.
Ms. Manning, however, maintains that uncodified portions of the EAJA
anticipate that her attorney will receive the EAJA fee award. In particular, she
points to Pub. L. 99-80, § 3, 99 Stat. 186 (1985). This section, however, refers to
the fact that the attorney must return to the claimant the smaller of the two fee
awards under the EAJA or under 42 U.S.C. § 406(b)(1). It does not state that the
attorney is entitled to receive the full amount of the EAJA fees awarded. Rather,
the purpose is to ensure that the attorney does not receive double compensation.
The language of § 406(b)(1) further supports the conclusion that the EAJA
award is for the prevailing party and not her attorney. Under § 406(b), the
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Commissioner “must withhold and pay a reasonable attorney’s fee directly to the
attorney out of the claimant’s past-due benefits, thus guaranteeing payment to the
attorney and avoiding collection problems, but the amount of the attorney’s fee
that must be withheld and directly paid to the attorney is limited to the maximum
of 25% of past-due benefits.” Burnett v. Heckler, 756 F.2d 621, 626 (8th Cir.
1985). Thus, unlike the EAJA, § 406(b) expressly provides for payment to the
attorney. Congress has not substantially amended § 406(b) since enacting the
EAJA. From this, we draw the conclusion that Congress knows what language to
use to award attorney’s fees to an attorney and what language to use when it
chooses to award the fees to the prevailing party. Congress could have worded
the EAJA statute to award attorney’s fees to the attorney, but it did not do so.
Further support for the conclusion that the EAJA award is for the prevailing
party and not for the attorney is the settled law that the attorney does not have
standing to apply for the EAJA fees; that right belongs to the prevailing party.
See Oguachuba v. INS, 706 F.2d 93, 97-98 (2d Cir. 1983). Just as a prevailing
party cannot assign her underlying substantive action, she cannot assign her right
to seek attorney’s fees, which is derivative of the underlying substantive action,
to her attorney. Cf. Pony v. County of Los Angeles, 433 F.3d 1138, 1140, 1142-44
(9th Cir.) (addressing attorney’s fees under § 1988 and rejecting as invalid under
California law plaintiff’s putative assignment of right to apply for attorney’s
fees), cert. denied, 126 S. Ct. 2864 (2006). Only after the prevailing party
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exercises her right to seek an award of attorney’s fees under the EAJA and
obtains an award may her attorney pursue collection of the attorney’s fees. See
id. at 1142, 1144.
Citing Willis v. Government Accountability Office, 448 F.3d 1341, 1347
(Fed. Cir. 2006), cert. denied, 127 S. Ct. 1356 (2007), and United States ex rel.
Virani v. Jerry M. Lewis Truck Parts & Equipment, Inc., 89 F.3d 574, 577
(9th Cir. 1996), Ms. Manning argues that even though the EAJA statute gives her
the right to claim the fees, her attorney has the right to receive the awarded fees.
Because these cases are distinguishable, we reject this argument.
The Ninth Circuit has held that Virani, a qui tam action under the False
Claims Act, does not apply to fee awards under § 1988. Gilbrook v. City of
Westminster, 177 F.3d 839, 874 (9th Cir. 1999). The court noted that there are
significant differences between a fee award in a qui tam action and in a § 1988
action. Gilbrook, 177 F.3d at 874. Those differences are (1) that the Supreme
Court has held that fee awards under § 1988 are bestowed upon the prevailing
party and not the attorney; (2) that the governmental-harm concerns present in a
qui tam action are not present in a civil rights action; and (3) that denying direct
payment to attorneys is consistent with § 1988’s purpose of attracting counsel to
represent civil rights plaintiffs. Id. (citing Jeff D., 475 U.S. at 731-32). Gilbrook
therefore specifically held that “[i]n the absence of a contractual assignment [of
the fee award] to counsel, § 1988 requires that attorney fee awards be made
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directly to the prevailing party.” 177 F.3d at 875. Based on our previous
discussion that legal principles from § 1988 cases apply to EAJA cases, we
conclude that Gilbrook’s analysis and holding are equally applicable in an EAJA
case.
Willis, a case under the Civil Service Reform Act, is distinguishable on the
ground that it addressed the issue whether the attorney had standing to claim
attorney fees under that Act. 448 F.3d at 1342, 1345. It cited Virani with
approval only to differentiate between the plaintiff’s right to seek the fees and the
attorney’s right to collect the awarded fees. Willis, 448 F.3d at 1347. But in a
footnote, Willis recognized that, in an EAJA context, the client, not the lawyer,
has the right to collect the fees. Id. at 1347 n.3 (citing FDL Techs., Inc. v. United
States, 967 F.2d 1578, 1580-81 (Fed. Cir. 1992), which addresses different EAJA
provision, 5 U.S.C. § 504(a)(1), but discusses 28 U.S.C. § 2412(d)(1)(A) and
determines they are comparable and that under both provisions prevailing party is
entitled to fee award).
Further, Ms. Manning argues that because pro se litigants are not eligible
for the award of EAJA attorney’s fees, see Demarest v. Manspeaker, 948 F.2d
655, 655-56 (10th Cir. 1991), the intention of the statute is to provide the attorney
with the award. But she fails to recognize that the purpose of the fee award is to
allow a claimant to present her claims without having to bear the cost of
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litigation. See id. at 656. If one of the costs the successful claimant has borne is
attorney’s fees, then she may, if eligible, recover them under the statute.
Ms. Manning cites Dixon-Townsell v. Barnhart, 445 F. Supp. 2d 1283
(N.D. Okla. 2006), as authority for reversing an offset of the EAJA fee award. In
Dixon-Townsell, the Social Security claimant’s EAJA fee award was completely
offset under the Debt Collection Improvement Act of 1996 by an amount owed for
unpaid child support. Id. at 1284. The claimant moved either to set aside the
administrative offset or to correct under Rule 60(a) the clerical error of awarding
fees to the claimant. Dixon-Townsell, 445 F. Supp. 2d at 1284. The district court
granted Rule 60(a) relief, amending the order to state that the EAJA attorney’s
fees award should be paid to counsel, and not to the claimant. Dixon-Townsell,
445 F. Supp. at 1284-85. The court found that the offset could be set aside and
the Commissioner had the authority to retrieve the offset money pursuant to
31 C.F.R. § 285.4(h). Dixon-Townsell, 445 F. Supp. 2d at 1285. The court also
found that there was no authority to grant the EAJA fees to the claimant, because
the fees are intended to compensate counsel and not to generate income for the
claimant. Id. (citing Demarest, 948 F.2d at 656).
We reject the conclusions reached in Dixon-Townsell. First, it neither
discusses the plain language of the EAJA statute, nor considers the legislative
history or case law interpreting the statute. In Ms. Manning’s case, the award
was correctly made to her and not to her attorney based on the clear statutory
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language that the award is to the prevailing party. See Reeves v. Barnhart,
473 F. Supp. 2d 1173, 1176-77 (M.D. Ala. 2007) (distinguishing and rejecting
Dixon-Townsell); see also McCarty v. Astrue, 505 F. Supp. 2d 624, 630-31
(N.D. Cal. 2007) (rejecting Dixon-Townsell as not persuasive). Dixon-Townsell’s
citation to Demarest was inapposite, because, as indicated above, that case set
forth the rule that pro se plaintiffs may not receive EAJA attorney’s fees awards,
and neither Mr. Dixon-Townsell nor Ms. Manning proceeded pro se. See Reeves,
473 F. Supp. 2d at 1177. And Demarest did not hold that the EAJA attorney’s
fees should be paid to counsel.
Continuing to argue that the EAJA award is for her attorney, Ms. Manning
contends that it is customary in the Tenth Circuit for the EAJA attorney’s fees to
be paid directly to counsel. It is true, as she points out, that this court in Weakley,
803 F.2d at 580, ordered the government to pay EAJA attorney’s fees to the
plaintiff’s attorney. But we did not address whether the Social Security claimant
or the claimant’s attorney was entitled to recover the fees under the EAJA statute.
We merely awarded attorney’s fees under § 406(b) and under the EAJA at the
same time. Weakley, 803 F.2d at 580. Because the EAJA fees were greater than
the § 406(b) fees, we ordered that counsel pay the smaller amount, represented by
the § 406(b) fees, to the claimant. Weakley, 803 F.2d at 580. We have, however,
more recently specifically stated in McGraw, based on analysis of the EAJA
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language, that the EAJA award is to the claimant, whereas the § 406(b) award is
to counsel. 6 McGraw, 405 F.3d at 497. 7
Ms. Manning next argues that providing payment to her, instead of to
counsel, might result in counsel receiving no payment for the work he has
performed, thereby negating the purpose of the EAJA. She also contends that
paying all the EAJA fees to the claimant directly would have a chilling effect on a
claimant’s ability to obtain representation. Ms. Manning’s argument is purely
speculative. Even if it is true, the clear language of the statute provides that
attorney’s fees are paid to the prevailing party, not the attorney. And in Jeff D.,
475 U.S. at 741 n.34, the Supreme Court addressed and rejected a similar
argument:
6
The issue presented in McGraw was whether § 406(b)(1) “allows the
district court to award attorney’s fees to claimant’s counsel when the court
remands a Title II Social Security disability case for further proceedings and the
Commissioner ultimately determines that the claimant is entitled to an award of
past-due benefits.” McGraw, 450 F.3d at 495-96.
7
Other courts have ordered payment of the EAJA attorney’s fees directly to
attorneys. See, e.g., Garcia v. Sullivan, 781 F. Supp. 969, 974 (S.D.N.Y. 1991);
Price v. Sullivan, 756 F. Supp. 400, 405 (E.D. Wis. 1991); Barriger v. Bowen,
673 F. Supp. 1167, 1170 (N.D.N.Y. 1987). None of these cases addressed why
the fees were paid to counsel instead of to the claimant or whether the fee awards
belonged to counsel or to the claimant. The Seventh Circuit has noted that while
“[t]echnically the award of attorney’s fees under section 1988 is to the party, not
to his lawyer, . . . it is common to make the award directly to the lawyer where
. . . the lawyer’s contractual entitlement is uncontested.” Richardson v. Penfold,
900 F.2d 116, 117 (7th Cir. 1990).
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We are cognizant of the possibility that decisions by individual
clients to bargain away fee awards may, in the aggregate and in the
long run, diminish lawyers’ expectations of statutory fees in civil
rights cases. If this occurred, the pool of lawyers willing to represent
plaintiffs in such cases might shrink, constricting the “effective
assess to the judicial process” for persons with civil rights grievances
which the Fees Act was intended to provide. . . . We believe,
however, that as a practical matter the likelihood of this circumstance
arising is remote.
Ms. Manning argues that the district court ignored the taxation problems
that would occur to her if the EAJA fee award is paid directly to her. Like the
lien issues mentioned in the first section of this decision, the taxation issues were
not developed in the district court. But because, as discussed above, the EAJA
attorney’s fees belong to the prevailing party, we can easily conclude that
Ms. Manning is properly taxed on that income. Cf. Campbell v. Commissioner,
274 F.3d 1312, 1313-14 (10th Cir. 2001) (holding that award of attorney’s fees
under Title VII is income to former employee); Sinyard v. Commissioner,
268 F.3d 756, 757, 759 (9th Cir. 2001) (holding that attorney’s fees paid on
prevailing party’s behalf pursuant to court order approving settlement of Age
Discrimination in Employment Act class actions are income to prevailing party).
See generally Commissioner v. Banks, 543 U.S. 426, 438-39 (2005) (declining to
address argument that effectiveness of fee-shifting statutes is undermined by
treating statutory fee awards as income to plaintiff).
Although we conclude that the award of EAJA attorney’s fees is to
Ms. Manning and not to her attorney, we recognize that perhaps the answer is not
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as clear as it would appear to be from the statutory language, legislative history,
and case law. Admittedly, it seems counter intuitive to hold that an award of
attorney’s fees does not go to the attorney, especially since the EAJA fees are
calculated based on the time spent by the attorney and based on the attorney’s
hourly rate, see 28 U.S.C. § 2412(d)(1)(B), (2)(A). Indeed, the answer to the
question “who do the fees go to” was not clear to the government, because it
switched positions during the course of this litigation. In the district court, it
consistently took the position that the award belonged to the attorney. But on
appeal, it took the position that the award belonged to Ms. Manning. 8 Despite the
government’s confusion, we are bound by the statutory language, legislative
history, and case law, which has been set forth in detail above.
8
On appeal, the Commissioner attempted to justify the stipulation as
follows.
Since district courts within the region from time to time have
ordered [the Social Security Administration] to pay EAJA fees
directly to counsel, see, e.g., Dixon-Townsell v. Barnhart,
445 F. Supp. 2d 1283, 1285 (N.D. Okla. 2006), the government
acquiesced in counsel’s belief that the magistrate judge might have
made a clerical error in awarding the EAJA fees here to the plaintiff
instead of her attorney. The magistrate judge, however, made clear
that he had not “committed a clerical error in awarding attorneys’
fees under the EAJA to the Plaintiff instead of awarding them to her
attorney.” Thus, the premise of the government’s stipulation was
invalid.
Aplee. Br. at 9 n.4 (appendix citation omitted).
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III. Are the EAJA Fees Subject to Offset Under the Debt Collection Improvement
Act for Unpaid Student Loan Debts?
Under the Debt Collection Improvement Act, the Department of the
Treasury’s Financial Management Service has the authority to collect nontax
debts owed to the United States government by offsetting payments made by other
federal agencies. See 31 U.S.C. § 3716; 31 C.F.R. § 285.5(a)(1); see also Exec.
Order No. 13,019, 61 Fed. Reg. 51,763 (Sept. 28, 1996) (“[T]he primary purpose
of the Debt Collection Improvement Act is to increase the collection of nontax
debts owed to the Federal Government . . . .”). All federal payments, including
“fees,” are subject to administrative offset. 31 C.F.R. § 285.5(e)(1). The only
exceptions are for those payments specifically listed. Id. § 285.5(e)(2); see also
§ 285.5(e)(3)(i)(A) (noting that special rules apply to offset of Social Security
benefit payments, excluding SSI payments). One payment type excluded from
offset is payments for which a statute expressly prohibits offset. Id.
§ 285.5(e)(2)(v); see also 31 U.S.C. § 3716(e)(2). An EAJA award is not among
the listed exceptions in § 285.5(e)(2). Nor does the EAJA statute prohibit offset
of any fee award. See 28 U.S.C. § 2412. Furthermore, the Debt Collection
Improvement Act does not exempt an EAJA attorney’s fees award from offset.
See 28 U.S.C. § 3716. Thus, it is clear that the Debt Collection Improvement Act
is sufficiently broad to offset an EAJA fees award for an unpaid student loan debt
owed to the federal government.
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Ms. Manning argues that the district court abused its discretion by failing
to consider the holding in Lockhart v. United States, 546 U.S. 142 (2005), that the
United States may offset an outstanding school loan debt from Social Security
benefits beyond a ten-year statute of limitations period. She contends that
Lockhart did not make a similar holding with respect to an offset from the EAJA
attorney’s fees. Relying on McGraw, 450 F.3d at 497, she points out that the
EAJA fees are not paid out of Social Security benefits. This argument is without
merit, because the Higher Education Technical Amendments of 1991, Pub. L. No.
102-26, § 3, 105 Stat. 123, 124-25 (codified at 20 U.S.C. § 1091a(a)), which was
relied on in Lockhart, eliminated the statute of limitations for all student loan
collections. Thus, the district court did not abuse its discretion by failing to
consider that under Lockhart the government can recover outstanding student loan
debt from Social Security benefits.
Instead, the fact that Social Security benefits can be offset arguably
provides further support for the conclusion that the EAJA fees award can be
offset. The purpose of disability benefits is to provide “income required for
ordinary and necessary living expenses.” 20 C.F.R. § 404.508(a). To the extent
that the Debt Collection Improvement Act reaches Social Security disability
benefits, whose purpose is to provide income for living expenses, it certainly
follows that the Act includes EAJA fees. In comparison, attorney’s fees paid
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directly to an attorney under § 406 are not subject to offset, simply because they
are paid directly to the attorney.
We conclude that the EAJA attorney’s fees award was properly paid to
Ms. Manning and that those fees were subject to administrative offset by the Debt
Collection Improvement Act for student loan debts she owed to the Department of
Education. The judgment of the district court is therefore AFFIRMED.
Ms. Manning’s unopposed motion to file an addendum of recent citations is
GRANTED.
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