Appeal from a final judgment entered in the United States District Court for the Southern District of New York, Charles L. Brieant, Jr., Judge, awarding plaintiff attorney's fees and costs following default of defendant Secretary of Health and Human Services in responding to plaintiff's motion for fees and costs.
Kearse, Cardamone, and Winter, Circuit Judges.
Defendant Margaret M. Heckler, Secretary of Health and Human Services ("Secretary"), appeals from a final judgment entered in the United States District Court for the Southern District of New York, Charles L. Brieant, Jr., Judge, awarding plaintiff Josephine Marziliano attorney's fees and costs pursuant to 28 U.S.C. § 2412(d)(1)(A) (Supp. V 1981), enacted in 1980 as part of the Equal Access to Justice Act ("EAJA"). Judgment was entered after the Secretary had defaulted in responding to plaintiff's motion for such fees and costs. On appeal the Secretary contends that the district court abused its discretion in denying the Secretary's motion pursuant to Fed. R. Civ. P. 55(c) to set aside the entry of default and that the district court's entry of judgment by default was precluded by Fed. R. Civ. P. 55(e). We disagree and affirm the judgment.
The controversy before us, the relevant details of which are not in dispute, has its origins in Marziliano's attempt to secure disability benefits under the Social Security Act ("Act"). In 1980, Marziliano sought disability insurance benefits under Title II of the Act, 42 U.S.C. §§ 401-433 (1976) (amended 1976-1983), and Supplemental Security Income under Title XVI of the Act, 42 U.S.C. §§ 1381-1383c (1976) (amended 1976-1983), claiming that she was disabled by reason of a psychiatric impairment. The Secretary denied Marziliano's claim, determining on the basis of the Secretary's medical-vocational guidelines contained in Appendix 2 to Subpart P of 20 C.F.R. § 404 (1982) (the "Guidelines") that there was work in the national economy that Marziliano could perform. In 1982 Marziliano, represented by Westchester Legal Services, Inc., commenced the present action for judicial review of the Secretary's decision, contending, inter alia, that under the then-controlling decision of this Court in Campbell v. Secretary of Health and Human Services, 665 F.2d 48, 53-54 (2d Cir. 1981) (" Campbell "), rev'd, 461 U.S. 458, 103 S. Ct. 1952, 76 L. Ed. 2d 66 (1983), the Secretary was not permitted simply to rely on the Guidelines in denying disability benefits, but was required to identify suitable available alternative jobs through the testimony of a vocational expert.
Both sides moved for judgment on the pleadings. The Secretary contended that Campbell was wrongly decided and pointed out that seven other Circuits disagreed with our ruling in that case.*fn1 The Secretary had petitioned to the Supreme Court for certiorari in Campbell, and she requested that the district court not decide the Guidelines issue in the present case until the Supreme Court had acted upon the petition. On June 21, 1982, while these motions were sub judice, the Supreme Court granted certiorari in Campbell. Schweiker v. Campbell, 457 U.S. 1131, 102 S. Ct. 2956, 73 L. Ed. 2d 1348 (1982).
The district court declined to await further Supreme Court action on Campbell. On September 27, 1982, it ruled that the Secretary had failed to meet her burden, established by our decision in Campbell, to identify "specific alternative occupations suitable for the claimant along with job descriptions, explaining the nature of the job and the claimant's ability to perform it" (Memorandum and Order dated September 27, 1982 ("September 27 Decision"), at 2), and concluded that the Secretary's determination that Marziliano was not disabled thus was not supported by substantial evidence. The court remanded the case to the Secretary for further proceedings.
A. The Motion for Attorney's Fees
On October 26, 1982, Marziliano moved for an award of $3131.25 in attorney's fees and $77 in costs pursuant to EAJA, 28 U.S.C. § 2412(d)(1)(A), which provides in relevant part as follows:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a) [of 28 U.S.C. § 2412], incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
Marziliano contended that, having obtained a ruling that the Secretary's decision was not supported by substantial evidence, she was a "prevailing party" within the meaning of EAJA, that the Secretary's position was not "substantially justified," and that there were no "special circumstances" that would make an award of attorney's fees and costs unjust. In support of the motion, Marziliano submitted an affidavit of her counsel setting forth counsel's experience and standing, and suggesting a reasonable hourly rate; a detailed description of the time spent and the work performed by counsel; the expenses incurred in prosecuting the case; and the status of Westchester Legal Services, Inc. The motion was returnable on November 8, 1982.
On October 29, 1982, Alan Nisselson, Esq., the Assistant United States Attorney in charge of the case for the Secretary, telephoned Eileen R. Kaufman, Esq., Marziliano's counsel, to request additional time in which to respond to Marziliano's fee motion. Kaufman agreed to a one-month extension and Nisselson sent her a stipulation for execution. On November 8, 1982, the return date of the motion, Nisselson had not received the executed stipulation, and he called Kaufman's office to inquire about it. Kaufman was not in her office at the time, however, and Nisselson did nothing further with respect to the motion on that date. He neither appeared in court nor attempted to inform the district court by letter, telephone, or in any other manner of the adjournment agreed to between the parties.
Unaware of the agreement between the parties and having received no opposing papers from the Secretary by the return date, Judge Brieant granted Marziliano's motion for attorney's fees and costs on November 8, 1982. The court noted that the Secretary had failed to respond. The order reads as follows:
The within motion is granted and legal fees fixed and allowed in the amount requested. Submit a Judgment to the Judgment Clerk. No papers or appearance received in opposition.
Order dated November 8, 1982 ("November 8 Order").
On November 9, 1982, Kaufman returned Nisselson's call and informed him that she had returned the signed stipulation to him by mail on November 4. She also informed him that on November 8, the district court ...