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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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Flint Wood, et al.,

No. CV-12-08098-PCT-DGC
Plaintiffs,

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v.

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ORDER

Thomas J Betlach, et al.,

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Defendants.

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Pending before the Court is Plaintiffs’ motion for attorneys’ fees under the Equal

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Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), and the Civil Rights Attorneys’

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Fees Award Act of 1976 (“CRAFAA”), 42 U.S.C. § 1988. Doc. 119. The motion is fully

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briefed and no party has requested oral argument. The Court will deny the motion.

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I.

Relevant Facts.

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Arizona participates in Medicaid through the Arizona Health Care Cost

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Containment System (“AHCCCS”), which administers Arizona’s state Medicaid plan, its

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demonstration projects, and certain state-only initiatives. On March 31, 2011, the State

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of Arizona submitted a request to the Secretary of Health and Human Services for

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approval of a proposed demonstration project under Section 1115 of the Social Security

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Act (“SSA”). The Secretary may approve any Section 1115 demonstration project that,

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in her judgment, “is likely to assist in promoting the objectives” of specified SSA

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programs, including the Medicaid program. 42 U.S.C. § 1315(a). Arizona’s proposed

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new project covered the childless adult population that had been covered by the previous

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2001 demonstration project, but with enrollment frozen at lower levels. It also included

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the Copayment Rule, which modified the 2001 demonstration project by increasing

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copayments for the childless adult population, as well as other modifications to the

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program. On October 21, 2011, the Secretary approved the project for a five-year period,

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through September 30, 2016.

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Plaintiffs brought an action in May 2012 to challenge the heightened and

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mandatory copayments AHCCCS imposed on childless adults. Plaintiffs argued that the

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Secretary’s approval of the challenged copayments on October 21, 2011, violated the

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Administrative Procedure Act (“APA”) and the SSA. This Court granted Plaintiffs’

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motion for class certification (Doc. 87), but denied their motion for a preliminary

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injunction (Doc. 88). On February 7, 2013, the Court granted Plaintiffs’ motion for

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summary judgment, finding that the Secretary violated the APA because she failed to

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consider and address Plaintiffs’ evidence and the expert opinion of Dr. Ku. Doc. 102.

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The Court remanded the case to the Secretary for a new decision. The Court noted that

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the Secretary was required to analyze three factors in deciding whether to approve a

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Section 1115 project: (1) whether the project was an experimental, pilot or demonstration

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project; (2) whether the project was likely to assist in promoting the objectives of the act;

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and (3) the extent and period for which she found the project was necessary. The Court

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explained that the Secretary could consider the demonstration project as a whole in

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analyzing these factors, and that the Secretary need not separately evaluate whether each

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individual component of the project satisfied this test. The Court retained jurisdiction of

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this action during the remand.

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On remand, the Secretary gave new consideration to Arizona’s request.

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April 8, 2013, she reaffirmed her prior decision and again approved Arizona’s request

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consistent with the Court’s directives. The parties briefed renewed motions for summary

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judgment, and the Court entered summary judgment in the Secretary’s favor. Doc. 117.

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The Court held that the Secretary had reasonably determined that Arizona’s proposed

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project met the Section 1115 factors.

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On

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II.

Legal Standard.

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Under the EAJA, the Court shall award attorneys’ fees to a prevailing party unless

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the United States shows that its position was “substantially justified or that special

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circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A); Gutierrez v. Barnhart,

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274 F.3d 1255, 1258 (9th Cir. 2001). The Supreme Court’s decision in Hensley v.

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Eckerhart, 461 U.S. 424 (1983), sets forth the analysis for attorneys’ fees under § 1988

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and is applied in EAJA cases. INS v. Jean, 464 U.S. 154, 161 (1990); Sorenson v. Mink,

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239 F.3d 1140, 1145 n.2 (9th Cir. 2001) (noting the only difference is the calculation of

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the attorney rate).

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To be a “prevailing party,” a litigant must meet two criteria: first, the litigant must

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show a “material alteration” in the legal relationship of the parties; and second, the

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alteration must be “judicially sanctioned.” See Buckhannon Bd. & Care Home, Inc. v. W.

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Va. Dep’t of Health & Human Res., 532 U.S. 598, 604-05 (2001); Perez-Arellano v.

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Smith, 279 F.3d 791, 794 (9th Cir. 2002) (applying Buckannon analysis to EAJA);

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Bennett v. Yoshina, 259 F.3d 1097, 1100 (9th Cir. 2001) (applying Buckannon analysis to

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CRAFAA).

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III.

Analysis.

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A.

Prevailing Party.

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Defendants assert that Plaintiffs are not prevailing parties.

Doc. 129 at 2.

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Defendants argue that a plaintiff does not “prevail” when it gains interim relief, such as a

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remand that does not conclude the litigation. Id. They argue that a plaintiff must show

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that it gained meaningful relief at the end of the litigation, which Plaintiffs did not

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achieve in this case. Id. Plaintiffs respond that they succeeded in their primary goal of

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obtaining a judicial finding that the Secretary’s approval of the heightened and mandatory

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copayments violated the law and because the Secretary would not have made another

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determination with respect to the copayment project without this litigation. Doc. 119-1 at

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4. Although the Court did not vacate the Secretary’s approval, and the Court’s order

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remanding the issue to the Secretary was not a final judgment, Plaintiffs maintain that

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they are prevailing parties. Id.

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The Ninth Circuit has held that many types of relief, including interim relief, can

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give rise to prevailing party status. See Richard S. v. Dep’t of Developmental Servs., 317

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F.3d 1080, 1086 (9th Cir. 2003) (finding that a litigant prevailed when he entered into a

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legally enforceable settlement agreement); Watson v. Cnty. of Riverside, 300 F.3d 1092,

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1096 (9th Cir. 2002) (holding that a litigant “prevailed” and was entitled to an award of

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attorneys’ fees when he won a preliminary injunction). Plaintiffs also cite Ninth Circuit

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precedent holding that a party who wins a remand is entitled to “prevailing party” status

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even if he does not ultimately succeed with his claim before an agency.

Rueda-

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Menicucci v. INS, 132 F.3d 493, 495 (9th Cir. 1997); see also Corbin v. Apfel, 149 F.3d

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1051, 1053 (9th Cir. 1998) (“[A] party is eligible for fees under EAJA if he wins at any

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intermediate stage in the proceedings[.]”).

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Despite these seemingly dispositive cases, all of the law relied on by Plaintiffs

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predates Sole v. Wyner, 551 U.S. 74 (2007), in which the Supreme Court signaled a shift

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in how courts determine whether a party “prevails” for purposes of the CRAFAA and

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EAJA.

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injunction after an abbreviated hearing, but is denied a permanent injunction after a

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dispositive adjudication on the merits, does not qualify as a “prevailing party” under

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CRAFAA. Id. at 86. Plaintiffs do not cite, and the Court is not aware of, any Ninth

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Circuit precedent after Sole holding that interim relief in the context of the APA, EAJA,

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or CRAFAA entitles a party to “prevailing party” status.

The Supreme Court held in Sole that a plaintiff who gains a preliminary

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In Sole, the plaintiff notified the Florida Department of Environmental Protection

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(“DEP”) that on Valentine’s Day 2003 she intended to create anti-war artwork consisting

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of nude individuals assembled into a peace sign on a state-owned beach. The DEP

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informed the plaintiff that her peace sign display would be lawful only if the participants

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complied with the “Bathing Suit Rule,” which requires all patrons of Florida state parks

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to wear, at a minimum, a thong and, if female, a bikini top. The plaintiff wished to go

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forward with her Valentine’s Day 2003 display and filed a complaint seeking an

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injunction against enforcement of the Bathing Suit Rule. A district court granted a

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preliminary injunction, and the peace symbol display took place. After discovery, both

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sides moved for summary judgment and the district court entered judgment against the

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plaintiff. The district court determined, however, that while the plaintiff ultimately failed

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to prevail on the merits, she had obtained a preliminary injunction prohibiting

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interference with the Valentine’s Day 2003 display and therefore qualified as a prevailing

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party. The district court awarded attorneys’ fees to the plaintiff.

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The Eleventh Circuit affirmed, reasoning that the plaintiff had gained the primary

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relief she sought – a preliminary order allowing her to present the peace symbol display.

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The Supreme Court reversed, holding that the plaintiff’s “fleeting success” did not

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establish that she prevailed on the gravamen of her plea for injunctive relief. Id. at 84.

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Because the Bathing Suit Rule remained intact, the Court concluded that the plaintiff had

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gained no enduring change in the legal relationship between herself and the state officials

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she sued. Id. at 86. The plaintiff was not a prevailing party because “her initial victory

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was ephemeral.” Id. Sole instructs courts to regard a case as a whole, rather than

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analyzing prevailing party status at each stage of the litigation. Id. at 78. The Supreme

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Court reasoned that “[a] plaintiff who ‘secur[es] a preliminary injunction, then loses on

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the merits as the case plays out and judgment is entered against [her],’ has ‘[won] a battle

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but los[t] the war.’” Id. (quoting Watson, 300 F.3d at 1096).

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Sole undermines Plaintiffs’ claim to prevailing party status. Because the Court

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ultimately entered summary judgment in the Secretary’s favor, leaving all features of the

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proposed demonstration project unchanged, including the Copayment Rule, Plaintiffs’

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efforts ultimately failed to alter the legal relationship of the parties. The interim relief

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was a “fleeting victory” as in Sole because it did not change the demonstration project or

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any other aspects of the parties’ legal relationship.

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The Court acknowledges that features of the process and relief obtained by

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Plaintiffs differ from the process and relief in Sole. The preliminary relief obtained in

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Sole was obtained in an “emergency proceeding [that] allowed no time for discovery, nor

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for adequate review of documents or preparation and presentation of witnesses,” and was

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“tentative [in] character.” Id. at 84. The interim relief obtained in this case was obtained

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after discovery and detailed briefing. Additionally, the Sole plaintiff’s temporary success

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“rested on a premise the District Court ultimately rejected.” Id. at 85. The interim

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success obtained by Plaintiffs rested on a premise that was not later rejected by the Court.

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Notwithstanding these differences, the Court concludes that Plaintiff is not a

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prevailing party.

The fact remains that no lasting alteration has been made in the

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relationship between Plaintiffs and Defendants.

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meaningful relief than the Sole plaintiff who was permitted to complete her artistic

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display. In fact, the result in this litigation actually solidified the parties’ pre-litigation

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legal relationship by judicially sanctioning the Secretary’s approval of Arizona’s

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demonstration project. Under the rationale of Sole, the Court concludes that Plaintiffs are

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not prevailing parties under the EAJA or CRAFAA.

Plaintiffs in this case secured less

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IT IS ORDERED that Plaintiffs’ motion for attorneys’ fees (Doc. 119) is denied.

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Dated this 3rd day of January, 2014.

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