Summary of a Recent
Judicial Development in
Administrative Law

Applicants Not Allowed to Collect
Fees and Costs Under EAJA

Lynn Cox
National AgLaw Center Research Assistant

In an action for attorney's fees brought by loan applicants against the United States Department of Agriculture, the United States Court of Appeals for the Eighth Circuit has ruled that the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, 28 U.S.C. § 2412, did not allow recovery for both attorney's fees and agent's fees. Lane v. U.S. Dept. of Agric., 294 F.3d 1001, 1003 (8th Cir. 2002). The court also concluded that the judicial officer did not abuse his discretion by not allowing fees that accrued before the date of denial of the delinquent loan servicing applications. See id.

Dwight Lane and Darvin Lane, plaintiffs, applied for delinquent loan servicing through the Farmers Home Administration, predecessor to the Farm Service Agency (FSA). See id. at 1002. The FSA did not review the Lanes' application within ninety days and then denied the application. See id. The Lanes appealed the denial to the National Appeals Division (NAD) and were successful. See id. The Lanes filed a motion to collect attorney's fees under the EAJA. See id.

The Lanes appealed the lower proceedings to the Eighth Circuit three separate times to consider the issue of attorney's fees. See id. In the Lanes' first appeal, the Eighth Circuit concluded that an "appeal to the NAD was an adversary adjudication under the Administrative Procedures Act thus attorney's fees were available under the EAJA." Id. (citing Lane v. United States Dept. of Agric., 120 F.3d 106, 109-10 (8th Cir. 1997)). The court remanded the case for the NAD hearing officer to "consider the merits of the Lanes' fee petitions." Id. The Lanes prevailed before the NAD hearing officer because "the Agency's position in the underlying denial of delinquent loan servicing was not substantially justified, and no special circumstances existed that would make a fee award unjust." Id. at 1002-03. The NAD officer awarded Dwight Lane $95,933.45 and Darvin Lane $118,064.26 for attorney's fees, agent's fees, and costs. See id. at 1003.

The FSA appealed the award to the Judicial Officer of the USDA. See id. While the appeal before the Judicial Officer was pending, the Lanes brought their second appeal challenging the "FSA's authority to bring an administrative appeal to an EAJA award" before the Eighth Circuit. Id. The Eighth Circuit dismissed the appeal because the agency decision was not yet final. See id. (See Lane v. United States Dep't of Agriculture, 187 F.3d 793, 795 (8th Cir. 1999)). The Judicial Officer reduced Darvin Lane's award to $27,353.30 and Dwight Lane's award to $28,040.30. See id.

The Lanes appealed the reduction of the award to the district court. See id. The district court granted the FSA's motion for summary judgment, thus affirming the Judicial Officer's decision to reduce their awards. See id. In their third and final appeal, the Lanes appealed the district court's decision to the United States Court of Appeals for the Eighth Circuit. See id. The Eighth Circuit reviewed the record de novo and "considered the facts and all reasonable inferences" that could "be drawn from them in the light most favorable to the Lanes." Id.

The Lanes argued that the district court did not apply the proper standard of review. See id. They also objected to "the Judicial Officer's exclusion of agent's fees from the fee award." Id. They claimed that the EAJA allowed recovery of both attorney's and agent's fees. See id. The Lanes also contended that "the Judicial Officer abused his discretion" by not allowing fees "that accrued before the date the USDA formally denied the delinquent loan servicing applications." Id. at 1004. They argued that "the adversarial proceeding began when the Agency failed to review their applications for delinquent loan servicing within the 90 day time limit and investigated them for bad faith." Id.

The Eighth Circuit concluded that "the district court correctly granted summary judgment to the Agency." Id. at 1003. It explained that "abuse of discretion governs review of fee awards" and "questions of law are reviewed de novo." Id. The court determined that the record showed that the "district court properly considered legal issues de novo and applied legal conclusions to the factual record made before the administrative agency." Id. The court noted that the district court "recognized its authority to modify the fee award" was "limited to situations where the fee award was unsupported by substantial evidence." Id.

The court also rejected the Lanes' claim that the EAJA allowed recovery of both attorney's and agent's fees. See id. The court noted that the plain language of the EAJA provided that "'fees and other expenses' includes the reasonable expenses of expert witnesses, the reasonable cost of any study . . ., and reasonable attorney or agent fees.'" Id. (citations omitted). The court concluded that "'or', in 'attorney or agent fees' is disjunctive, meaning a claimant cannot receive fee awards for both attorney and agent fees." Id. The court noted that Congress intended that agent fees were to be awarded when a nonattorney represents a party before an administrative agency. See id. It concluded that the reduction in the award was consistent with the intent of Congress "to reduce the deterrent effect of the expense of seeking review of unreasonable government action." Id.

The court determined that even if the EAJA was construed to allow recovery of both attorney's and agent's fees, it would be unreasonable to award both. See id. The court noted that the facts showed that the Lanes had three representatives, which it believed was not necessary. See id. at 1004. It determined that the fee reduction was supported by substantial evidence and was not an abuse of discretion. See id.

The court also ruled that the Judicial Officer did not abuse his discretion by not allowing fees "that accrued before the date the USDA formally denied" the loan application. Id. The court explained that "the EAJA allows for awards of fees and expenses in connection with an adversarial adjudication proceeding." See id. It noted that an adversarial adjudicative proceeding under 5 U.S.C. § 554 (2000) is "when the United States is represented by counsel and the controversy is resolved after a hearing on the record." Id. The court stated that

[t]he Agency's notification that it was seeking legal advice on whether the Lanes had acted in bad faith, while adversarial, does not transform the Agency's review of the loan servicing application into an adjudicative proceeding. The Judicial Officer's finding that the adversarial judgment began no earlier than the denial of the Lanes' applications is not an abuse of discretion.

Id.

The case was decided on June 12, 2002; this summary was posted July, 2003