Caseflicks

Supreme Court of the United States • 1993

Shalala v. Schaefer

509 U.S. 292 | 113 S. Ct. 2625 | 125 L. Ed. 2d 239 | 1993 U.S. LEXIS 4399

Full access

Unlock the video and quiz

The written brief is free to read below. Subscribe to watch the video explainer and take the quiz.

Create an account Log in

Takeaway

In short, a proper sentence-four Social Security remand ends the district-court action and ordinarily starts EAJA’s fee clock after final judgment becomes unappealable—but a missing Rule 58 separate judgment document prevents that clock from starting.

Background

Richard Schaefer sought Social Security disability benefits. After the agency denied his claim, he filed a judicial-review action under 42 U.S.C. § 405(g). The parties filed cross-motions for summary judgment, and the District Court found that the Secretary had made three errors. On April 4, 1989, it reversed the denial of benefits and remanded the matter to the Secretary for further consideration. The order did not include a separate Rule 58 judgment document.

On remand, the agency reconsidered Schaefer’s application and awarded benefits. Schaefer then sought attorney’s fees under the Equal Access to Justice Act (EAJA) in July 1990. The Secretary initially treated the post-remand agency decision as the relevant final judgment, but, after Melkonyan v. Sullivan, changed position and argued that the 30-day EAJA filing period had expired in July 1989, shortly after the District Court’s remand order.

The District Court held the fee application timely under Eighth Circuit precedent, awarded Schaefer $1,372.50 in fees, and the Eighth Circuit affirmed. The Supreme Court affirmed the result, but largely rejected the lower court’s rationale.

Issues

Issue #1

Whether a district court’s remand under sentence four of 42 U.S.C. § 405(g) is a final judgment that triggers EAJA’s 30-day fee-application period after the time to appeal expires.

Holding

Yes. A sentence-four remand must be accompanied by a judgment reversing, modifying, or affirming the Secretary’s decision, and that judgment becomes final for EAJA purposes when it is no longer appealable.

Reasoning

EAJA requires a fee application within 30 days of a “final judgment,” and Melkonyan establishes that this term means a judgment entered by a court, not an administrative decision issued after remand. Thus, the agency’s favorable benefits decision could not itself start the EAJA clock.

Section 405(g) provides only two exclusive forms of remand in Social Security review cases: sentence-four and sentence-six remands. Schaefer conceded that his remand was under sentence four, because it followed the District Court’s finding of legal errors in the Secretary’s denial and did not fit either limited category of sentence-six remand.

The text of sentence four authorizes a court to enter a judgment affirming, modifying, or reversing the Secretary’s decision, with or without remanding the cause. It does not permit a court to remand first, retain jurisdiction, and postpone judgment until the agency completes its work. Immediate entry of judgment is the central feature distinguishing a sentence-four remand from a sentence-six remand.

Under sentence eight of § 405(g), the court’s judgment is final except for ordinary appellate review. Accordingly, once the appeal period ends, a sentence-four judgment is “final and not appealable,” which is precisely EAJA’s definition of a final judgment. In a proper sentence-four case, the EAJA period therefore begins after the court’s judgment and the expiration of the appeal period—not after the remand proceedings conclude.

Issue #2

Whether Sullivan v. Hudson permits a district court entering a sentence-four remand to retain jurisdiction and defer the EAJA filing period until the agency proceedings on remand end.

Holding

No. Hudson does not authorize that procedure for a proper sentence-four remand.

Reasoning

Schaefer argued that Hudson allowed recovery of EAJA fees for work performed in administrative proceedings on remand and therefore supported delaying final judgment until that work was complete. Otherwise, a claimant might have to file for fees before knowing the amount of later administrative-remand fees.

The Court recognized that Hudson involved what was functionally a sentence-four remand, but explained that the district court there had improperly retained jurisdiction throughout the remand proceedings. That continued jurisdiction was central to Hudson’s treatment of the administrative work as part of the same civil action.

Later decisions, especially Sullivan v. Finkelstein and Melkonyan, clarified that a sentence-four remand terminates the civil action challenging the Secretary’s decision. Hudson therefore remains applicable where the district court properly retains jurisdiction in the narrow setting of a sentence-six remand, but it does not control a sentence-four remand that must end in immediate judgment.

Issue #3

Whether a Social Security claimant who obtains a sentence-four remand is a prevailing party under EAJA before the agency awards benefits on remand.

Holding

Yes. A claimant who obtains a sentence-four judgment reversing the Secretary’s denial is a prevailing party even if the ultimate entitlement decision remains to be made on remand.

Reasoning

Schaefer argued that he could not prove prevailing-party status until the agency actually awarded benefits. The Court rejected that premise because a sentence-four remand is a judgment for the claimant that terminates the judicial action after the claimant has secured reversal of the Secretary’s adverse decision.

The Court distinguished language in Hudson suggesting that a remand generally does not make a claimant a prevailing party. That language did not account for the now-critical distinction between sentence-four remands, which end with judgment for the claimant, and sentence-six remands, which do not finally resolve the judicial action.

The Court’s prevailing-party precedents supported its conclusion. Unlike a merely favorable procedural ruling or a favorable legal statement followed by judgment against the plaintiff, a sentence-four remand produces a judgment reversing the agency’s denial. It also gives the claimant a significant part of the benefit sought in bringing suit: judicial invalidation of the adverse benefits decision.

Issue #4

Whether Schaefer’s EAJA application was nevertheless timely when the District Court failed to enter its sentence-four judgment on a separate document as required by Federal Rule of Civil Procedure 58.

Holding

Yes. Because no separate Rule 58 judgment was entered, the remand order remained appealable, so EAJA’s 30-day period had not begun to run when Schaefer applied for fees.

Reasoning

Although the April 4 order substantively constituted the judgment required by sentence four, Rule 58 required that judgment to be set out on a separate document. The record showed that the District Court did not comply with that requirement.

Under Federal Rule of Appellate Procedure 4(a), when the United States or a federal officer is a party, the time to appeal runs for 60 days after entry of judgment. A judgment is entered for that purpose only when it complies with Rule 58’s separate-document requirement.

The Secretary correctly noted that an order may sometimes be immediately appealable despite the absence of a separate judgment document. But EAJA runs from the end of the appeal period, not from the first moment an appeal may be taken. Without a Rule 58 judgment, the appeal period had not ended; the order remained appealable, and Schaefer’s fee application was timely.

Concurrences

Justice Stevens

Reasoning

Justice Stevens, joined by Justice Blackmun, agreed that Schaefer’s application was timely but disagreed with the majority’s substantive treatment of sentence-four remands. In his view, the Court should have affirmed the Eighth Circuit’s reasoning as well as its judgment: when a remand contemplates administrative proceedings that will determine whether benefits are due, the district court should be able to enter final judgment for EAJA purposes after those proceedings conclude.

He viewed the majority’s rule as inconsistent with Sullivan v. Hudson. Hudson held that otherwise eligible claimants may recover fees for legal work performed during remand proceedings, and it rested on the practical reality that those proceedings can be essential to securing benefits and vindicating the claimant’s rights. Starting EAJA’s 30-day clock at the remand order creates the awkward prospect of a protective fee application before the claimant knows whether benefits will be obtained or what later fees will be incurred.

Justice Stevens rejected the majority’s sharp distinction between sentence-four and sentence-six remands for EAJA purposes. That distinction may matter for appellate finality, but it does not change the claimant’s need for counsel during agency proceedings. Indeed, sentence-four remands commonly follow agency legal error, making fee recovery for work required by that error especially consistent with EAJA’s purpose of reducing the deterrent effect of litigation against the Government.

In his view, Melkonyan’s statement that the clock begins upon a sentence-four remand was dicta that should be disavowed. A more sensible sequence would allow the claimant to obtain a remand, complete the required administrative proceedings, establish prevailing-party status through success on remand, and then seek fees after the district court enters an appropriate final judgment.