Stephen Sprinkle v. Carolyn Colvin , 777 F.3d 421 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-3654
STEPHEN A. SPRINKLE,
Plaintiff-Appellant,
v.
CAROLYN W. COLVIN, Acting Commissioner
of Social Security,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:09-cv-05042 — Charles R. Norgle, Judge.
____________________
ARGUED SEPTEMBER 30, 2014 — DECIDED JANUARY 23, 2015
____________________
Before KANNE, WILLIAMS, and HAMILTON, Circuit Judges.
WILLIAMS, Circuit Judge. Stephen Sprinkle, a social securi-
ty disability claimant, sought an award of attorney’s fees
under the Equal Access to Justice Act (the “EAJA”). While
the EAJA contains a presumptive rate cap of $125 an hour,
courts may award enhanced fees where they are justified be-
cause of an increase in the cost of living. The district court
found that Sprinkle was entitled to EAJA fees, but rejected
2 No. 13-3654
his request for a cost-of-living enhancement on the ground
that he failed to meet the stringent and difficult burden set
out in Mathews-Sheets v. Astrue, 653 F.3d 560 (7th Cir. 2011).
While the district court’s fee award was reasonable in light
of our decision in Mathews-Sheets, today we make clear that
two aspects of that decision incorrectly demanded more than
the text or purpose of the EAJA require. An EAJA claimant
seeking a cost-of-living adjustment to the attorney fee rate
need not offer either (1) proof of the effects of inflation on
the particular attorney’s practice or (2) proof that no compe-
tent attorney could be found for less than the requested rate.
Instead, an EAJA claimant may rely on a general and readily
available measure of inflation such as the Consumer Price
Index, as well as proof that the requested rate does not ex-
ceed the prevailing market rate in the community for similar
services by lawyers of comparable skill and experience. An
affidavit from a single attorney testifying to the prevailing
market rate in the community may suffice to meet that bur-
den. Therefore, we vacate the district court’s award and re-
mand for proceedings consistent with this opinion.
I. BACKGROUND
In February 2005, Stephen Sprinkle applied for supple-
mental social security income (SSI), alleging he was disabled
due to mental and physical impairments. After exhausting
his administrative remedies, Sprinkle sought judicial review
of the Commissioner’s “final decision” that he was not disa-
bled. In October of 2012, the district court held that the agen-
cy failed to properly evaluate evidence of Sprinkle’s disabil-
ity, reversed the Commissioner’s decision, and remanded for
further consideration.
No. 13-3654 3
In December 2012, Sprinkle applied for attorney’s fees
under the EAJA. His fee petition claimed that an award in
excess of the statutory rate of $125 an hour was justified be-
cause of an increase in the cost of living since 1996, when
that rate was set. Sprinkle requested an hourly rate of
$173.38, which reflected the statutory rate adjusted for infla-
tion to December 2009 (when the bulk of his legal work was
performed) according to the Consumer Price Index (CPI). In
support of his request for enhanced fees, Sprinkle submitted
affidavits from four attorneys with Social Security disability
practices. They all had non-contingent hourly rates, ranging
from $250 to $500 an hour, which were well above the statu-
tory cap. Sprinkle’s attorney also affirmed that his non-
contingent hourly rate was $275 and that the cost of running
his law practice had increased significantly due to inflation
since 1996. Among others, he had a 3% per year increase for
office rent and a 3-5% per year increase in staff salaries.
On May 29, 2013, the district court found that Sprinkle
was entitled to attorney’s fees, but denied his request for a
cost-of-living adjustment on the ground that Sprinkle failed
to meet his burden set forth in Mathews-Sheets v. Astrue. Ac-
cording to the court, “[a]side from mere conclusory argu-
ment Sprinkle provide[d] no evidence that … alleged in-
creased costs [were] due to inflation, which has increased the
cost of providing adequate legal services in this matter.”
Sprinkle’s fee award was set at the statutory rate of $125 an
hour.
Sprinkle filed a Rule 59(e) motion for reconsideration,
submitting two additional affidavits from attorneys and a
commercial survey of attorney billing rates. Rejecting the
additional evidence as untimely, the court again denied
4 No. 13-3654
Sprinkle’s request for adjusted fees on the ground that his
evidence was insufficient under Mathews-Sheets. This time,
the court stated that Sprinkle failed to prove, quoting
Mathews-Sheets, 653 F.3d at 565, “that without a cost of living
increase that would bring the fee award up to [the requested
$173.38] per hour, a lawyer capable of competently handling
the challenge that his client mounted to the denial of social
security disability benefits could not be found in the relevant
geographical area to handle such a case.”
Sprinkle now appeals the district court’s partial award of
attorney’s fees.
II. ANALYSIS
At issue in this appeal is the evidence needed to support
a cost-of-living adjustment for attorney’s fees under the
EAJA in social security cases. Sprinkle contends that the dis-
trict court erred in denying his request for a cost-of-living
adjustment because he satisfied the burden set out in
Mathews-Sheets v. Astrue, which requires evidence of the ef-
fects of inflation on one’s attorney’s costs and proof that no
competent attorney could be found at the statutory rate. In
the alternative, he argues that Mathews-Sheets was wrongly
decided and should be overturned.
We review the district court’s award of attorney’s fees for
abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 558
(1988). As with all questions of law, we review its interpreta-
tion of the EAJA’s cost-of-living provision de novo. Raines v.
Shalala, 44 F.3d 1355, 1360 (7th Cir. 1995).
The EAJA allows a “prevailing party” to receive attor-
ney’s fees for work performed in a judicial proceeding chal-
lenging an administrative denial of social security benefits,
No. 13-3654 5
“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). It con-
templates the award of fees based upon “prevailing market
rates for the kind and quality of the services furnished” up
to a presumptive cap of $125 per hour. Id. at § 2412(d)(2)(A).
However, that cap may be exceeded when the court “deter-
mines that an increase in the cost of living [since 1996, when
the rate was last set] or a special factor, such as the limited
availability of qualified attorneys for the proceedings in-
volved, justifies a higher fee.” Id. at § 2412(d)(2)(A)(ii).
Our last decision to consider the burden facing EAJA
claimants seeking enhanced fees based on “an increase in the
cost of living” was Mathews-Sheets v. Astrue. In that case, a
social security disability claimant sought enhanced fees of
$225 an hour, which she claimed was the prevailing market
rate. 653 F.3d at 562. In its response brief, the government
opposed any fee award in excess of $125 an hour. Id. In re-
ply, the claimant then offered evidence of an increase in the
cost of living, and calculated the inflation-adjusted statutory
rate to be roughly $170. Id. at 563. The district court rejected
this request for enhanced fees on the ground that infor-
mation regarding the cost of living in the reply brief had
been submitted “too late.” Id. On appeal, we reversed, hold-
ing that the evidence of a cost-of-living increase was timely
given that the government had “opened the way” for such a
reply when it argued the requested award amount was too
high. Id. We remanded for consideration of whether, in light
of the petitioner’s evidence of an increase in the cost of liv-
ing, a fee enhancement was justified. Id. at 564.
6 No. 13-3654
While our holding in Mathews-Sheets turned on a proce-
dural error, we discussed at some length what claimants
seeking cost-of-living adjusted fees should establish before
the district court. First, we stated that claimants had to point
to something more than simply inflation; they had to
demonstrate that the rate requested was justified because
“inflation ha[d] increased the cost of providing adequate le-
gal services to [the] person seeking relief against the gov-
ernment.” 653 F.3d at 563. Second, we suggested that upon
remand, the claimant in Mathews-Sheets would be required to
show that “without a cost of living increase that would bring
the fee award up to [the rate requested in the fee petition], a
lawyer capable of competently handling the challenge that
his client mounted to the denial of social security disability
benefits could not be found in the relevant geographical area
to handle such a case.” Id. at 565.
With the benefit of hindsight, it is now clear that
Mathews-Sheets demanded much more from EAJA claimants
seeking inflation-adjusted attorney rates than our prior deci-
sions had.. In the years prior to Mathews-Sheets, courts
awarded cost-of-living adjustments as a matter of course
“given the passage of time since the establishment of the
hourly rate [in 1996].” Warren v. Astrue, No. 09-6498, 2010
WL 5110217, at *5 (N.D. Ill. Dec. 8, 2010) (quoting Tchemkou
v. Mukasey, 517 F.3d 506, 512 (7th Cir. 2008)). Judges typically
set hourly rates according to the Consumer Price Index, ad-
justing the statutory rate for inflation based upon the date in
which the fees were incurred. E.g., Hieu Thi Tran v. Astrue,
No. 09-4074, 2010 WL 3928482, at *1 n.2 (C.D. Ill. Sept. 23,
2010); McDaniel v. Astrue, No. 07-00642, 2009 WL 2762720, at
*2 (S.D. Ind. Aug. 25, 2009); Simms v. Astrue, No. 08-00094,
2009 WL 1659809, at *7 (N.D. Ind. June 12, 2009).
No. 13-3654 7
We disrupted this straightforward approach for several
reasons. EAJA fee enhancements, we explained, were not
meant to be automatic. 653 F.3d at 563, 565. And, we rea-
soned, general markers of inflation like the CPI did not
demonstrate how or whether inflation affected particular at-
torney’s costs; as such, they could theoretically produce
“windfalls” in some cases. Id. at 563. We also casted doubt
on whether, as a general matter, the CPI should be used
“over other inflation measures” absent proof of its appropri-
ateness in any given case. Id.
While we made clear that something besides the CPI
should be proffered by EAJA claimants, we gave little guid-
ance as to what evidence would suffice to justify a cost-of-
living adjustment, or how such adjustments should be calcu-
lated. As a result, district courts in this circuit have struggled
to apply the Mathews-Sheets standard without making the
EAJA fee award process too demanding, complex, and ex-
pensive. The results have been inconsistent and suggest that
clearer guidance is needed. Some judges interpreted the de-
cision as imposing upon claimants a “dual burden” of show-
ing the effects of inflation on attorney costs and that no
competent attorney could be found without the requested
fee increase. See Amey v. Astrue, No. 09-2712, 2012 WL
4738985, at *3 (N.D. Ill. Oct. 2, 2012) (describing “dual bur-
den” approach and denying inflation-adjusted rate); Seabron
v. Astrue, No. 11-1078, 2012 WL 1985681, at *3 (N.D. Ill. June
4, 2012) (applying dual burden and granting inflation-
adjusted rate); Heichelbech v. Astrue, No. 10-0065, 2011 WL
4452860, at *2 (S.D. Ind. Sept. 26, 2011) (applying dual bur-
den and denying inflation-adjusted rate). Others rejected this
strict interpretation in favor of the view that Mathews-Sheets
only requires that claimants “present evidence showing a
8 No. 13-3654
general increase in attorney’s fees in the relevant geograph-
ical area due to inflation, such that the legal market could
not sustain an hourly rate of $125.” See e.g., Just v. Astrue, No.
11-1856, 2012 WL 2780142, at *2 (N.D. Ill. July 9, 2012) (grant-
ing inflation-adjusted rate); Shipley v. Astrue, No. 10-1311,
2012 WL 1898867, at *3-4 (S.D. Ind. May 23, 2012) (granting
inflation-adjusted rate).
In the case presently before us, the district court took the
position that Mathews-Sheets imposed upon Sprinkle the
“dual” burden of showing the effects of inflation on his at-
torney’s costs and that no competent attorney could be
found for less than the rate requested. And, it agreed with
the Commissioner that Sprinkle’s evidentiary proffer—the
CPI and six attorney affidavits attesting—failed to satisfy
this high bar.
While the district court’s award of attorney’s fees was
reasonable in light of our language in Mathews-Sheets, for a
number of reasons, we make clear now that our interpreta-
tion of the EAJA’s cost-of-living provision in that case—as
requiring claimants to provide proof of the effects of infla-
tion on attorney costs as well as evidence that no competent
attorney could be found for less than the rate requested—
was incorrect.
As an initial matter, in order to obtain a cost-of-living ad-
justment, a claimant need not prove the unavailability of
competent counsel willing to take the case for less than the
amount requested. This interpretation is consistent with the
EAJA’s text, which sets forth two, independent bases for
achieving a fee enhancement: an increase in the cost of living
“or” some other “special factor, such as the limited availabil-
ity of qualified attorneys for the proceedings involved.” 28
No. 13-3654 9
U.S.C. § 2412(d)(2)(A)(ii). As the use of the disjunctive “or”
makes clear, claimants need not show both. See also Raines v.
Shalala, 44 F.3d 1355, 1361 (7th Cir. 1995) (under “special fac-
tor” test, court determines whether a case requires an identi-
fiable practice specialty not easily acquired by reasonably
competent attorney; “cost of living” is not a consideration);
Marcus v. Shalala, 17 F.3d 1033, 1039 (7th Cir. 1994) (treating
“increase in the cost of living” and “special factors” as alter-
native bases for enhanced fees under EAJA); Castaneda-
Castillo v. Holder, 723 F.3d 48, 74-77 (1st Cir. 2013) (holding
claimant was not entitled to enhanced fees under “special
factor” provision, but was eligible for cost-of-living adjust-
ment).
In addition, we find that EAJA claimants should not be
required to prove the effect of inflation on their individual
attorney’s costs in order for a judge to find that an increase
in the cost of living justifies a higher fee. The government’s
general measure of inflation (the CPI), which embodies con-
siderable expertise and effort, is both more practical and
more meaningful than a measure of the cost of providing le-
gal services in one particular law office. Costs in a particular
law office will vary in arbitrary and unpredictable ways.
Sorting out those complexities in an evidentiary hearing
would be both expensive and irrelevant to the text and pur-
pose of the EAJA. The EAJA, like other federal fee-shifting
statutes, contemplates that fee awards “shall be based upon
prevailing market rates” paid by clients, not the costs paid
by attorneys to rent offices, to buy computers and office
equipment and supplies, or to pay their staffs. 28 U.S.C. §
2412(d)(2)(A); see also Richlin Sec. Serv. Co. v. Chertoff, 553 U.S.
571, 578-79 (2008) (holding EAJA allows claimants to recover
fees incurred for paralegal services based on market rates for
10 No. 13-3654
such services, not their cost to attorneys); Blum v. Stenson,
465 U.S. 886, 895-96 (1984) (holding fees under 42 U.S.C. §
1988 are to be calculated according to prevailing market
rates, not attorney costs). Finally, we note that an evidentiary
burden that would require evidence that no competent at-
torney could be found at the statutory rate is practically in-
feasible for litigants, administratively unworkable for courts,
and out of step with the EAJA’s purpose. How, after all,
might a claimant prove that no competent attorney could be
found at the statutory rate? Presumably, one would be
forced to conduct some sort of sampling of a large cross sec-
tion of lawyers in the area, resulting in EAJA fee hearings
that would rival “in complexity a public utility commission’s
rate of return proceeding.” Sosebee v. Astrue, 494 F.3d 583,
588 (7th Cir. 2007) (affirming that “proceeding to recover
fees under the [Equal Access to Justice] Act is intended to be
summary”) (internal citations omitted); see also Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983) (“A request for attorney’s
fees should not result in a second major litigation.”).
Similar difficulties exist for proving the effects of infla-
tion on individual attorney costs, as the Commissioner’s po-
sition in this case makes clear. The Commissioner argues
that because an attorney’s costs might increase for any num-
ber of reasons (Westlaw upgrades, moving to a bigger office,
etc.), claimants must submit business records, going back an
unknown number of years, to prove the effect of inflation.
Such an onerous requirement—which essentially requires
EAJA claimants to engage in graduate-level economic anal-
yses—flies in the face of the EAJA’s purpose, which is to en-
sure that persons not be “deterred from seeking review of, or
defending against, unreasonable government action because
of the expense involved in securing the vindication of their
No. 13-3654 11
rights.” Sullivan v. Hudson, 490 U.S. 877, 883 (1989) (quoting
Pub. L. No. 96-481, 94 Stat. 2325 (1980)); cf. Natural Res. Def.
Council, Inc. v. USEPA, 703 F.2d 700, 713 (3d Cir. 1983)
(“[T]he cost of living adjustment provision seems designed
to provide a disincentive to agencies to prolong the litigation
process.”).
So for these reasons, we overrule the standard set forth in
Mathews-Sheets and clarify the burden for obtaining a cost-
of-living adjustment under the EAJA. 1 Courts should gener-
ally award the inflation-adjusted rate according to the CPI, 2
using the date on which the legal services were performed.
See Tchemkou, 517 F.3d at 512. This position is in line with the
approach the majority of our sister circuits take when adju-
dicating requests for enhanced fees based upon an increase
in the cost of living under the EAJA. See Castaneda-Castillo v.
Holder, 723 F.3d 48, 76 (1st Cir. 2013) (adjusting “the $125
statutory cap to reflect the increase in the cost of living” ac-
cording to the CPI–U); Harris v. Sullivan, 968 F.2d 263, 265
(2d Cir. 1992) (agreeing with “almost every court that has
1 Because our opinion has the effect of changing the approach we
have taken to EAJA fee petitions, it was circulated to the full court pur-
suant to Circuit Rule 40(e). No judge favored a rehearing en banc on the
question of overruling Mathews-Sheets v. Astrue, 653 F.3d 560 (7th Cir.
2011).
2Courts in this circuit have relied both upon the Consumer Price In-
dex-All Urban Consumers (“CPI-U”), which is a national index, and re-
gion-specific indices. Compare Hamrick v. Astrue, No. 09-00179, 2010 WL
3862464, at *3-4 (N.D. Ind. Sept. 27, 2010) (applying CPI-U), with Stokes v.
Astrue, No. 09-0972, 2010 WL 4687806, at *1 (S.D. Ind. Nov. 10, 2010) (ap-
plying “Midwest Urban” CPI). We do not resolve this split and leave to
the discretion of the district courts whether to adopt the national or re-
gional index in specific cases.
12 No. 13-3654
applied … subsection [2412(d)(2)(A) of the EAJA] … that
‘cost of living’ … is properly measured by the Consumer
Price Index”); Garcia v. Schweiker, 829 F.2d 396, 401 (3d Cir.
1987) (“The Consumer Price Index may be used in determin-
ing cost of living adjustments under the EAJA.”); Sullivan v.
Sullivan, 958 F.2d 574, 576 (4th Cir. 1992) (holding the EAJA
“requires the use of a broad cost-of-living index,” such as the
CPI-U); Johnson v. Sullivan, 919 F.2d 503, 504 (8th Cir. 1990)
(holding the CPI “constitutes ‘proper proof’ of the increased
cost of living since the EAJA’s enactment and justifies an
award of attorney’s fees greater than” the statutory cap) (in-
ternal citation omitted); Thangaraja v. Gonzales, 428 F.3d 870,
876-77 (9th Cir. 2005) (“[A]ppropriate cost-of-living increases
are calculated by multiplying the $125 statutory rate by the
annual average consumer price index figure … (“CPI-U”) for
the years in which counsel’s work was performed.”); Am.
Wrecking Corp. v. Sec'y of Labor, 364 F.3d 321, 330 (D.C. Cir.
2004) (approving use of the CPI as “inflation calculator” for
EAJA cost-of-living adjustments). But see Bryant v. Comm'r of
Soc. Sec., 578 F.3d 443, 450 (6th Cir. 2009) (finding submission
of the CPI is “not enough” to obtain a cost-of-living adjust-
ment); Lopez v. Astrue, 236 Fed. App’x 106, 107 (5th Cir. 2007)
(unpublished) (“[D]istrict court did not err by refusing to
apply the CPI-U…”).
This does not create an automatic entitlement to fee en-
hancements. It simply recognizes that the EAJA’s language
about “the cost of living” reflects an assumption that general
measures like the CPI will provide a reasonably accurate
measure of the need for an inflation adjustment in most cas-
es. That assumption is consistent with the goal of keeping
EAJA fee proceedings relatively simple, rather than having
them resemble utility rate proceedings. If the government
No. 13-3654 13
believes for some reason that the CPI does not accurately re-
flect what has happened in a particular legal market, it can if
it wishes offer evidence to that effect.
While the CPI suffices as proof of an increase in the cost
of living, claimants must still produce satisfactory evidence
that the increase in the cost of living “justifies” the rate re-
quested. 28 U.S.C. § 2412(d)(2)(A)(ii). So claimants must
produce evidence that the rate they request is in line with
those prevailing in the community for similar services by
lawyers of comparable skill and experience. The affidavits
submitted in this case are more than sufficient for this pur-
pose. Indeed, a district court might find, in its discretion, a
single sworn statement from a claimant’s attorney, setting
forth the prevailing market rate, to be sufficient in some cas-
es. But to avoid the possibility of a “windfall,” courts may
not award an inflation-adjusted rate that is higher than the
prevailing market rate in the community for comparable le-
gal services. See Brungardt v. Comm'r of Soc. Sec., 234 Fed.
App’x 889, 891 (11th Cir. 2007) (unpublished) (per curiam)
(approving district court’s decision “to account for the cost
of living” in its fee award, “but not to exceed the fair market
rate”).
III. CONCLUSION
The judgment of the district court is VACATED, and this
case is REMANDED for further proceedings consistent with
this opinion.