Wood et al v. Betlach et al

Filing 131

ORDER denying 119 Motion for Attorney Fees. Signed by Judge David G Campbell on 1/3/2014.(DGC, nvo)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Flint Wood, et al., No. CV-12-08098-PCT-DGC Plaintiffs, 10 11 v. 12 ORDER Thomas J Betlach, et al., 13 Defendants. 14 15 Pending before the Court is Plaintiffs’ motion for attorneys’ fees under the Equal 16 Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), and the Civil Rights Attorneys’ 17 Fees Award Act of 1976 (“CRAFAA”), 42 U.S.C. § 1988. Doc. 119. The motion is fully 18 briefed and no party has requested oral argument. The Court will deny the motion. 19 I. Relevant Facts. 20 Arizona participates in Medicaid through the Arizona Health Care Cost 21 Containment System (“AHCCCS”), which administers Arizona’s state Medicaid plan, its 22 demonstration projects, and certain state-only initiatives. On March 31, 2011, the State 23 of Arizona submitted a request to the Secretary of Health and Human Services for 24 approval of a proposed demonstration project under Section 1115 of the Social Security 25 Act (“SSA”). The Secretary may approve any Section 1115 demonstration project that, 26 in her judgment, “is likely to assist in promoting the objectives” of specified SSA 27 programs, including the Medicaid program. 42 U.S.C. § 1315(a). Arizona’s proposed 28 new project covered the childless adult population that had been covered by the previous 1 2001 demonstration project, but with enrollment frozen at lower levels. It also included 2 the Copayment Rule, which modified the 2001 demonstration project by increasing 3 copayments for the childless adult population, as well as other modifications to the 4 program. On October 21, 2011, the Secretary approved the project for a five-year period, 5 through September 30, 2016. 6 Plaintiffs brought an action in May 2012 to challenge the heightened and 7 mandatory copayments AHCCCS imposed on childless adults. Plaintiffs argued that the 8 Secretary’s approval of the challenged copayments on October 21, 2011, violated the 9 Administrative Procedure Act (“APA”) and the SSA. This Court granted Plaintiffs’ 10 motion for class certification (Doc. 87), but denied their motion for a preliminary 11 injunction (Doc. 88). On February 7, 2013, the Court granted Plaintiffs’ motion for 12 summary judgment, finding that the Secretary violated the APA because she failed to 13 consider and address Plaintiffs’ evidence and the expert opinion of Dr. Ku. Doc. 102. 14 The Court remanded the case to the Secretary for a new decision. The Court noted that 15 the Secretary was required to analyze three factors in deciding whether to approve a 16 Section 1115 project: (1) whether the project was an experimental, pilot or demonstration 17 project; (2) whether the project was likely to assist in promoting the objectives of the act; 18 and (3) the extent and period for which she found the project was necessary. The Court 19 explained that the Secretary could consider the demonstration project as a whole in 20 analyzing these factors, and that the Secretary need not separately evaluate whether each 21 individual component of the project satisfied this test. The Court retained jurisdiction of 22 this action during the remand. 23 On remand, the Secretary gave new consideration to Arizona’s request. 24 April 8, 2013, she reaffirmed her prior decision and again approved Arizona’s request 25 consistent with the Court’s directives. The parties briefed renewed motions for summary 26 judgment, and the Court entered summary judgment in the Secretary’s favor. Doc. 117. 27 The Court held that the Secretary had reasonably determined that Arizona’s proposed 28 project met the Section 1115 factors. -2- On 1 II. Legal Standard. 2 Under the EAJA, the Court shall award attorneys’ fees to a prevailing party unless 3 the United States shows that its position was “substantially justified or that special 4 circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A); Gutierrez v. Barnhart, 5 274 F.3d 1255, 1258 (9th Cir. 2001). The Supreme Court’s decision in Hensley v. 6 Eckerhart, 461 U.S. 424 (1983), sets forth the analysis for attorneys’ fees under § 1988 7 and is applied in EAJA cases. INS v. Jean, 464 U.S. 154, 161 (1990); Sorenson v. Mink, 8 239 F.3d 1140, 1145 n.2 (9th Cir. 2001) (noting the only difference is the calculation of 9 the attorney rate). 10 To be a “prevailing party,” a litigant must meet two criteria: first, the litigant must 11 show a “material alteration” in the legal relationship of the parties; and second, the 12 alteration must be “judicially sanctioned.” See Buckhannon Bd. & Care Home, Inc. v. W. 13 Va. Dep’t of Health & Human Res., 532 U.S. 598, 604-05 (2001); Perez-Arellano v. 14 Smith, 279 F.3d 791, 794 (9th Cir. 2002) (applying Buckannon analysis to EAJA); 15 Bennett v. Yoshina, 259 F.3d 1097, 1100 (9th Cir. 2001) (applying Buckannon analysis to 16 CRAFAA). 17 III. Analysis. 18 A. Prevailing Party. 19 Defendants assert that Plaintiffs are not prevailing parties. Doc. 129 at 2. 20 Defendants argue that a plaintiff does not “prevail” when it gains interim relief, such as a 21 remand that does not conclude the litigation. Id. They argue that a plaintiff must show 22 that it gained meaningful relief at the end of the litigation, which Plaintiffs did not 23 achieve in this case. Id. Plaintiffs respond that they succeeded in their primary goal of 24 obtaining a judicial finding that the Secretary’s approval of the heightened and mandatory 25 copayments violated the law and because the Secretary would not have made another 26 determination with respect to the copayment project without this litigation. Doc. 119-1 at 27 4. Although the Court did not vacate the Secretary’s approval, and the Court’s order 28 remanding the issue to the Secretary was not a final judgment, Plaintiffs maintain that -3- 1 they are prevailing parties. Id. 2 The Ninth Circuit has held that many types of relief, including interim relief, can 3 give rise to prevailing party status. See Richard S. v. Dep’t of Developmental Servs., 317 4 F.3d 1080, 1086 (9th Cir. 2003) (finding that a litigant prevailed when he entered into a 5 legally enforceable settlement agreement); Watson v. Cnty. of Riverside, 300 F.3d 1092, 6 1096 (9th Cir. 2002) (holding that a litigant “prevailed” and was entitled to an award of 7 attorneys’ fees when he won a preliminary injunction). Plaintiffs also cite Ninth Circuit 8 precedent holding that a party who wins a remand is entitled to “prevailing party” status 9 even if he does not ultimately succeed with his claim before an agency. Rueda- 10 Menicucci v. INS, 132 F.3d 493, 495 (9th Cir. 1997); see also Corbin v. Apfel, 149 F.3d 11 1051, 1053 (9th Cir. 1998) (“[A] party is eligible for fees under EAJA if he wins at any 12 intermediate stage in the proceedings[.]”). 13 Despite these seemingly dispositive cases, all of the law relied on by Plaintiffs 14 predates Sole v. Wyner, 551 U.S. 74 (2007), in which the Supreme Court signaled a shift 15 in how courts determine whether a party “prevails” for purposes of the CRAFAA and 16 EAJA. 17 injunction after an abbreviated hearing, but is denied a permanent injunction after a 18 dispositive adjudication on the merits, does not qualify as a “prevailing party” under 19 CRAFAA. Id. at 86. Plaintiffs do not cite, and the Court is not aware of, any Ninth 20 Circuit precedent after Sole holding that interim relief in the context of the APA, EAJA, 21 or CRAFAA entitles a party to “prevailing party” status. The Supreme Court held in Sole that a plaintiff who gains a preliminary 22 In Sole, the plaintiff notified the Florida Department of Environmental Protection 23 (“DEP”) that on Valentine’s Day 2003 she intended to create anti-war artwork consisting 24 of nude individuals assembled into a peace sign on a state-owned beach. The DEP 25 informed the plaintiff that her peace sign display would be lawful only if the participants 26 complied with the “Bathing Suit Rule,” which requires all patrons of Florida state parks 27 to wear, at a minimum, a thong and, if female, a bikini top. The plaintiff wished to go 28 forward with her Valentine’s Day 2003 display and filed a complaint seeking an -4- 1 injunction against enforcement of the Bathing Suit Rule. A district court granted a 2 preliminary injunction, and the peace symbol display took place. After discovery, both 3 sides moved for summary judgment and the district court entered judgment against the 4 plaintiff. The district court determined, however, that while the plaintiff ultimately failed 5 to prevail on the merits, she had obtained a preliminary injunction prohibiting 6 interference with the Valentine’s Day 2003 display and therefore qualified as a prevailing 7 party. The district court awarded attorneys’ fees to the plaintiff. 8 The Eleventh Circuit affirmed, reasoning that the plaintiff had gained the primary 9 relief she sought – a preliminary order allowing her to present the peace symbol display. 10 The Supreme Court reversed, holding that the plaintiff’s “fleeting success” did not 11 establish that she prevailed on the gravamen of her plea for injunctive relief. Id. at 84. 12 Because the Bathing Suit Rule remained intact, the Court concluded that the plaintiff had 13 gained no enduring change in the legal relationship between herself and the state officials 14 she sued. Id. at 86. The plaintiff was not a prevailing party because “her initial victory 15 was ephemeral.” Id. Sole instructs courts to regard a case as a whole, rather than 16 analyzing prevailing party status at each stage of the litigation. Id. at 78. The Supreme 17 Court reasoned that “[a] plaintiff who ‘secur[es] a preliminary injunction, then loses on 18 the merits as the case plays out and judgment is entered against [her],’ has ‘[won] a battle 19 but los[t] the war.’” Id. (quoting Watson, 300 F.3d at 1096). 20 Sole undermines Plaintiffs’ claim to prevailing party status. Because the Court 21 ultimately entered summary judgment in the Secretary’s favor, leaving all features of the 22 proposed demonstration project unchanged, including the Copayment Rule, Plaintiffs’ 23 efforts ultimately failed to alter the legal relationship of the parties. The interim relief 24 was a “fleeting victory” as in Sole because it did not change the demonstration project or 25 any other aspects of the parties’ legal relationship. 26 The Court acknowledges that features of the process and relief obtained by 27 Plaintiffs differ from the process and relief in Sole. The preliminary relief obtained in 28 Sole was obtained in an “emergency proceeding [that] allowed no time for discovery, nor -5- 1 for adequate review of documents or preparation and presentation of witnesses,” and was 2 “tentative [in] character.” Id. at 84. The interim relief obtained in this case was obtained 3 after discovery and detailed briefing. Additionally, the Sole plaintiff’s temporary success 4 “rested on a premise the District Court ultimately rejected.” Id. at 85. The interim 5 success obtained by Plaintiffs rested on a premise that was not later rejected by the Court. 6 Notwithstanding these differences, the Court concludes that Plaintiff is not a 7 prevailing party. The fact remains that no lasting alteration has been made in the 8 relationship between Plaintiffs and Defendants. 9 meaningful relief than the Sole plaintiff who was permitted to complete her artistic 10 display. In fact, the result in this litigation actually solidified the parties’ pre-litigation 11 legal relationship by judicially sanctioning the Secretary’s approval of Arizona’s 12 demonstration project. Under the rationale of Sole, the Court concludes that Plaintiffs are 13 not prevailing parties under the EAJA or CRAFAA. Plaintiffs in this case secured less 14 IT IS ORDERED that Plaintiffs’ motion for attorneys’ fees (Doc. 119) is denied. 15 Dated this 3rd day of January, 2014. 16 17 18 19 20 21 22 23 24 25 26 27 28 -6-

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