Sosebee, George v. Astrue, Micahel J. ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-3326
GEORGE SOSEBEE,
Plaintiff-Appellant,
v.
MICHAEL J. ASTRUE, Commissioner
of Social Security,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 0001—Samuel Der-Yeghiayan, Judge.
____________
ARGUED APRIL 30, 2007—DECIDED JULY 17, 2007
____________
Before ROVNER, WOOD, and SYKES, Circuit Judges.
WOOD, Circuit Judge. In 1995, George Sosebee stopped
receiving medical care for hepatitis, among other serious
physical ailments, because he lacked insurance and
could not afford further treatment. Even though he was
suffering from severe physical problems, in 1998 he
returned to work because he “desperately needed money
for medical care”; he earned less than $5,000. Sosebee and
his wife are both currently unable to work. They do not
own a home; instead, they rent an apartment. Sosebee
performs some household chores out of necessity because
his wife cannot, but he must use his wife’s wheelchair
to move around. Despite this uncontradicted evidence,
2 No. 06-3326
the district court ruled that Sosebee failed to show his
net worth did not exceed $2,000,000. It therefore denied
his application for attorneys’ fees under the Equal Access
to Justice Act (EAJA), 28 U.S.C. § 2412. Although it did
not say so in so many words, the court must have con-
cluded that the circumstantial evidence of net worth that
Sosebee provided was insufficient to show that his
assets were below the statutory limit. This conclusion
was problematic to start with, and became entirely
untenable when Sosebee offered to supplement the rec-
ord through motions under Rules 59(e) and 60(b). We
therefore reverse and remand for further proceedings
consistent with this opinion.
I
Sosebee filed his original petition for social security
disability benefits in 1995. He was unsuccessful initially,
but on appeal in 2002, the district court remanded the
case to the Social Security Administration (“SSA”) for
rehearing. At that time, Sosebee submitted an applica-
tion for attorneys’ fees pursuant to EAJA, which the
district court granted. SSA denied Sosebee’s application
again in 2004, and Sosebee appealed again to the district
court. As before, the district court remanded the case to
SSA, and Sosebee filed another application for attorneys’
fees. The Commissioner of Social Security opposed the
motion. (At the time, the Commissioner was a woman. She
has since been replaced by a man; for convenience, we
use the gender of the incumbent Commissioner in this
opinion.) The Commissioner’s primary argument was
that the amount of Sosebee’s fee request was unreason-
able. He added, however, that Sosebee had not shown
that he was eligible for EAJA fees because he had not
provided enough evidence to prove that his net worth did
not exceed $2,000,000.
No. 06-3326 3
In his reply to the Commissioner’s opposition brief,
Sosebee stated that his net worth did not exceed
$2,000,000 at the time the civil action was filed, adding
“Sosebee did not specifically plead this in his initial EAJA
application, it was implied in Plaintiff ’s Memorandum
in Support of Summary Judgment.” Sosebee also pointed
(with appropriate citations) to evidence in the record that
supported his representation, including his inability to
afford medical care in 1995, his lack of medical insurance,
his lack of income during the relevant time period, and
his lack of any significant assets.
The district court denied Sosebee’s application for EAJA
fees on April 28, 2006. The court explained that “Sosebee
has not provided the court with documentation concern-
ing his net worth and he has not shown why he was
unable to do so.” Sosebee promptly filed a motion to
amend the judgment under FED. R. CIV. P. 59(e) and a
motion for relief under FED. R. CIV. P. 60(b), attaching
an affidavit with details about his net worth. (The
Rule 60 motion was technically premature in light of the
Rule 59 motion. See Kapco Mfg. Co. v. C&O Enterprises,
Inc., 773 F.2d 151, 153-54 (7th Cir. 1985). We disregard
the Rule 60 motion in the remainder of this opinion.) In
the Rule 59 motion, Sosebee argued that governing
caselaw indicated that it was enough for him to provide
the details about his net worth in his reply brief to the
Commissioner’s opposition brief to his application, or at
the very least the law was unclear at the time he made
his application and thus the evidence he had tendered
with the motion should be accepted. Sosebee’s new affida-
vit left no doubt that he qualified for fees:
May 1, 2006
I George Sosebee declare that I am the plaintiff in this
civil case for disability. I also declare the following
information is the truth to [the] best of my knowledge.
4 No. 06-3326
I have been on SSI Disability since December 2003. My
wife does not work and she also receives SSI. I re-
ceived $1,418.00 a month SSI and my wife receives
$1,063.00 a month. We have no other income and
I have not worked since 2002. I never had two million
in assets and do not expect to inherit any assets in
the future. I do not have any stocks, IRA, properties,
retirement plans, saving accounts. I have not received
any gifts or moneys.
My assets are: furniture, clothes, 1998 Chevy Malibu
and a life insurance policy - $5,000. In December 2004
I had $1,555 in a checking account to start and $12.80
as the ending balance. In 2004 I received a $1,260.00
a month from SSI. I live in an apartment complex
and pay $645 a month, plus utilities.
Truly;

George Sosebee
The district court was unmoved, denying the Rule 59(e)
motion on its merits on June 27, 2006. (The court also
denied Sosebee’s Rule 60(b) motion as untimely on that
date (although it was actually premature), and denied his
second Rule 60(b) motion on September 5, 2006.) Sosebee
filed his notice of appeal on August 28, 2006.
II
There are two issues in this case that require our
attention: whether the statements made in Sosebee’s
reply brief in support of his EAJA fees application satis-
fied his obligations under the EAJA to show his net
worth; and whether the district court abused its discre-
tion in denying Sosebee’s Rule 59(e) motion. We take
them in turn.
No. 06-3326 5
This court reviews a district court’s decision to award
or deny attorneys’ fees under the EAJA for abuse of
discretion. United States v. Hallmark Constr. Co., 200 F.3d
1076, 1078 (7th Cir. 2000). If the district court reached
its conclusion because of its interpretation of relevant
law, however, then we review that question of law de novo
because a district court’s application of an erroneous
view of the law is by definition an abuse of discretion.
Boyd v. Ill. State Police, 384 F.3d 888, 897 (7th Cir. 2004).
First, we must identify the source of Sosebee’s obliga-
tion to prove his net worth. The statute with which we
are dealing is § 2412(d)(1)(B), which reads as follows:
A party seeking an award of fees and other expenses
shall, within thirty days of final judgment in the
action, submit to the court an application for fees
and other expenses which shows that the party is a
prevailing party and is eligible to receive an award
under this subsection, and the amount sought, includ-
ing an itemized statement from any attorney or ex-
pert witness representing or appearing in behalf of
the party stating the actual time expended and the
rate at which fees and other expenses were computed.
The party shall also allege that the position of the
United States was not substantially justified. Whether
or not the position of the United States was substan-
tially justified shall be determined on the basis of the
record (including the record with respect to the action
or failure to act by the agency upon which the civil
action is based) which is made in the civil action for
which fees and other expenses are sought.
Also relevant is § 2412(b)(2)(B), which defines the term
“party” itself in relevant part as “an individual whose net
worth did not exceed $2,000,000 at the time the suit was
filed.” In Scarborough v. Principi, 541 U.S. 401 (2004), the
Supreme Court had this to say about the way these
provisions should be understood:
6 No. 06-3326
Relevant here, EAJA authorizes the payment of fees
to a prevailing party in an action against the United
States; the Government may defeat this entitlement
by showing that its position in the underlying liti-
gation “was substantially justified.” 28 U.S.C.
§ 2412(d)(1)(A). In a further provision, § 2412(d)(1)(B),
the Act prescribes the timing and content of applica-
tions seeking fees authorized by § 2412(d)(1)(A).
Section 2412(d)(1)(B) specifies as the time for filing
the application “within thirty days of final judgment
in the action”. In the same sentence, the provision
identifies the application’s contents, in particular, a
showing that the applicant is a “prevailing party” who
meets the financial eligibility condition (in this case, a
net worth that “did not exceed $2,000,000 at the time
the . . . action was filed,” § 2412(d)(2)(B)); and a
statement of the amount sought, with an accompany-
ing itemization.
541 U.S. at 405. Although § 2412(d)(1)(A) does not ex-
pressly incorporate the financial eligibility details to
which the Court referred, which as it noted are found
within the definition of the term “party” found in
§ 2412(d)(1)(B), the Court construed the reference to the
need to show “eligibility” in the former statute to incorpo-
rate the financial limitations. See also Bazalo v. West, 150
F.3d 1380, 1384 (Fed. Cir. 1998) (noting that “[t]he
additional requirement of net worth . . . is not separately
enumerated in the statute, but subsumed within the
definition of ‘party’ ”).
This court had already held, years earlier, that “the
party seeking to recover its litigation costs . . . [bears] the
burden of establishing that it [meets] the net worth
limitations of the EAJA”. Woll v. United States, 44 F.3d
464, 470 (7th Cir. 1994). Neither we nor the Supreme
Court in Scarborough, however, had to focus on what a
party needs to do in order to satisfy that obligation. The
No. 06-3326 7
question we must address is thus whether Sosebee satis-
factorily showed both that he prevailed and that he met
the financial eligibility criteria of § 2412(d)(2)(B).
Somewhat surprisingly, no standard practice or rule
for fee petitions seems to have developed. (This may be
because, in the overwhelming majority of Social Security
cases, it is plain from the record that the plaintiff ’s net
worth is nowhere near the $2,000,000 mark.) In Comm’r,
INS v. Jean, 496 U.S. 154 (1990), the Supreme Court
summarized the requirements for a fee application as
follows:
[E]ligibility for a fee award in any civil action re-
quires: (1) that the claimant be a “prevailing party”;
(2) that the Government’s position was not “substan-
tially justified”; (3) that no “special circumstances
make an award unjust”; and, (4) pursuant to 28 U.S.C.
§ 2412(d)(1)(B), that any fee application be sub-
mitted to the court within 30 days of final judgment in
the action and be supported by an itemized statement.
496 U.S. at 158. The only question at issue in Jean,
however, was whether the position of the Government
was substantially justified. The Court therefore had
nothing to say about what the applicant had to present
in order to show that she was a “prevailing party.” At
least one court dispensed with the need for a party to
reiterate that she meets the financial criteria, when that
was otherwise apparent from evidence in the record. See,
e.g., Hirschey v. Fed. Energy Regulatory Comm’n., 760 F.2d
305, 309 n.19 (D.C. Cir. 1985) (concluding that “[t]here
is no serious question here that, according to record
documents, [plaintiff] meets the financial qualifications
specified in 28 U.S.C. § 2412(d)(2)(B)” with no further
discussion of the plaintiff ’s satisfaction of the net worth
requirement).
This was the route that Sosebee took in his initial
application for fees. When the Commissioner, in passing,
8 No. 06-3326
questioned whether he met the net worth requirements
in his opposition brief, Sosebee replied with record cita-
tions that he believed supported his eligibility. The dis-
trict court rejected this showing as inadequate, and went
on in its rulings on the Rule 59 and Rule 60 motions to
demand concrete information on the net worth question.
Insofar as the district court was saying that an affi-
davit of net worth would be an efficient way of presenting
evidence on the point, we agree with it. Indeed, applicants
for fees and their counsel would be well advised to sub-
mit such an affidavit in every case, to avoid the kind of
litigation we have here. Nevertheless, there is nothing
magical about an affidavit if other competent evidence
in the record supports a finding that the applicant quali-
fies as a “party”—meaning that his or her net worth does
not exceed $2,000,000.
Cases interpreting the EAJA’s requirements have not
been as specific as they perhaps should have been on this
point, as Sosebee points out. Courts have interpreted
the statute to require varying levels of supporting evi-
dence, depending on whether the applicant is a corpora-
tion or individual and whether there is a serious doubt
about the applicant’s eligibility. The Tenth Circuit has
said that “[w]hen challenged as to eligibility for an EAJA
award, the party seeking such an award must do more
than make a bare assertion that it meets the statutory
criteria,” and in that setting it found insufficient “an
unverified and unsworn letter from [the party’s] accoun-
tant.” Shooting Star Ranch, LLC v. United States, 230
F.3d 1176, 1178 (10th Cir. 2000) (emphasis added). The
Ninth Circuit has commented that “the standard of proof
is not articulated [but] the Supreme Court has stated that
a ‘request for attorney’s fees should not result in a second
major litigation.’ Consequently, some informality of proof
is appropriate.” United States v. 88.88 Acres of Land, 907
F.2d 106, 108 (9th Cir. 1990) (quoting Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983)).
No. 06-3326 9
The Court of Federal Claims (a trial-level Article I court,
see 28 U.S.C. § 171) has found inadequate a party’s
unsupported statement that he satisfied the EAJA net
worth requirement, but in that case there was contradic-
tory evidence in the record about the plaintiff ’s net worth.
Doe v. United States, 54 Fed. Cl. 337, 343 (Fed. Cl. 2002).
The court undoubtedly saw a red flag when “the underly-
ing cause of action began with the assertion that plain-
tiff was ‘a prospective buyer’ of a yacht.” Id. See also Fields
v. United States, 29 Fed. Cl. 376, 383 (Fed. Cl. 1993)
(holding that a conclusory affidavit without support-
ing evidence is inadequate to establish net worth). By
contrast, the Federal Circuit (which, of course, hears
appeals from the Court of Federal Claims, see 28 U.S.C.
§ 1295(a)(3)) has quoted approvingly the Court of Appeals
for Veterans’ Claims standard that a party satisfies the
EAJA by stating in the fee application that “the ap-
plicant’s net worth, at the time of filing the appeal, did
not exceed $2,000,000 or by filing a reference to an in
forma pauperis ruling.” Bazalo, 150 F.3d at 1381-82.
Our own court has held, and we reaffirm, that “[t]he
proceeding to recover fees under the [Equal Access to
Justice] Act is intended to be summary; it is not in-
tended to duplicate in complexity a public utility com-
mission’s rate of return proceeding.” Cont’l Web Press, Inc.
v. NLRB, 767 F.2d 321, 323 (7th Cir. 1985). The EAJA is
meant to open the doors of the courthouse to parties, not
to keep parties locked in the courthouse disputing fees
well after the resolution of the underlying case. The
EAJA’s requirements must be interpreted accordingly.
The Commissioner is correct that Sosebee’s net worth
must meet the statutory requirements as of the date
Sosebee commenced his suit in district court, which is
January 2005. He had the burden of showing this by the
normal civil standard of proof, which is to say by a prepon-
10 No. 06-3326
derance of the evidence. See Herman & MacLean v.
Huddleston, 459 U.S. 375, 390 (1983). Although his initial
application may have been conclusory, when the Com-
missioner challenged him on this point he identified
evidence in the record that supported him. Reviewing the
materials on which he relied and even ignoring the
additional facts contained in his supplemental affidavit,
we conclude that no reasonable factfinder could find that
Sosebee’s net worth as of January 2005 exceeded
$2,000,000. That record included several key facts
about Sosebee’s recent income, healthcare, and living
situation, and it also had the 2001 and 2002 district court
findings that Sosebee was eligible to proceed in forma
pauperis and that he was eligible for an EAJA attorneys’
fees award.
In denying Sosebee’s EAJA application, the district
court either applied an impermissibly high standard of
proof or it improperly exalted form over substance. The
court asserted that it “need not draw inferences” from the
evidence, but this is exactly what factfinders do. Drawing
inferences is not the same thing as speculation. Indeed,
nothing but wild speculation would have supported a
finding that Sosebee was worth more than $2,000,000.
Nowhere in his brief does the Commissioner seriously
suggest that Sosebee does not meet the EAJA’s net
worth requirement. Sosebee did not stand silent in re-
sponse to the Commissioner’s challenge to his net worth,
as in Woll, 44 F.3d at 470. When challenged, he replied
with specific, uncontradicted evidence in the record. Taken
as a whole, Sosebee’s proof of financial eligibility, while
informal, was adequate. 88.88 Acres of Land, 907 F.2d
at 108 (quoting Hensley, 461 U.S. at 437). The district
court abused its discretion in concluding otherwise.
No. 06-3326 11
III
Even if one were to conclude that the court’s initial
decision lay within the bounds of discretion, that cannot
be said about its denial of Sosebee’s Rule 59(e) motion. To
the extent that a Rule 59(e) motion is based on new
evidence, the decision whether to grant or deny it is
reviewed for abuse of discretion. In re Prince, 85 F.3d 314,
324 (7th Cir. 1996). To the extent that the movant raises
a question of law, we will review the district court’s
decision de novo. Sosebee’s motion presented “newly
discovered evidence that was not available at the time
of trial . . . [and] pointed to evidence in the record
that clearly establishes a manifest error of law or fact.”
County of McHenry v. Ins. Co. of the West, 438 F.3d 813,
819 (7th Cir. 2006) (internal citations and quotation
marks omitted).
Rule 59(e) motions offer district courts an opportunity
to correct errors that may have crept into the proceeding,
before the case leaves the district court for good. The
district court here rejected Sosebee’s motion because it
thought that Sosebee was relying on information that “he
could . . . have presented . . . to the court earlier.” Perhaps
if Sosebee had held back on arguments that were avail-
able to him, this point would have some force. But the
rejected arguments and facts were not being presented
to the court for the first time. With the exception of
Sosebee’s affidavit, all of the other support he offered on
the issue of his net worth in his Rule 59(e) motion was
already in the record. Sosebee’s Rule 59(e) motion asked
the district court to correct the error it made when it
ignored that evidence. See In re Prince, 85 F.3d at 324(reviewing the “evidence in the record” brought to the
district court’s attention in a Rule 59(e) motion although
not finding abuse of discretion).
Faced with imprecise standards and an unexpected
application of the law by the district court, Sosebee
12 No. 06-3326
properly made a Rule 59(e) motion. Sosebee’s motion told
the district court why he could not have made a better
argument originally, through no fault of his own, as he had
no warning that the district court was going to apply a
much more stringent standard to the eligibility question
than other courts have used in the past. Then Sosebee
attached his affidavit, showing his willingness and
ability to comply with the standard the court had adopted.
We agree with the Eleventh Circuit that some device for
correction of insufficient detail on net worth must be
available. In a case similar to ours, that court held that
the failure to plead net worth should not be fatal to an
EAJA attorneys’ fees application:
Based on the stated purpose of Congress in enact-
ing and extending the EAJA, we conclude that Con-
gress did not intend the EAJA application process to
be a high stakes gamble in which one pleading
failure, such as neglecting to assert that one’s net
worth did not exceed $2,000,000 at the time the
suit was filed, completely forecloses a litigant’s op-
portunity for EAJA fees.
Singleton v. Apfel, 231 F.3d 853, 858 (11th Cir. 2000). We
conclude that the district court’s rejection of Sosebee’s
Rule 59(e) motion was also an abuse of discretion.
IV
In light of our conclusions with respect to Sosebee’s
initial application and his Rule 59(e) motion, we have no
need to reach his arguments about the Rule 60(b) motions.
(In fact, we lack jurisdiction over the second Rule 60(b)
motion, which was decided after Sosebee filed his notice
of appeal in this court. His failure to file a separate
notice of appeal from that action means that it is not
before us. See Goffman v. Gross, 59 F.3d 668, 673 (7th Cir.
No. 06-3326 13
1995)). Knowing Sosebee’s history of more than a decade
of disability, his inability to afford medical care, and
his marginal ability to care for himself and his family,
the district court should have found that Sosebee satis-
fied the EAJA’s net worth requirement. At the very least,
when Sosebee called the court’s attention to the relevant
evidence in the record and furnished his affidavit, the
court should have granted Sosebee’s Rule 59(e) motion. We
REVERSE the judgment of the district court and REMAND
for further proceedings in accordance with this opinion.
Circuit Rule 36 shall apply on remand.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-17-07