whether a remand order is a "final judgment" for purposes of appellate review. In Finkelstein, as in the instant case, the district court reversed the Secretary and remanded for further consideration. The Supreme Court held that the remand order constituted a final judgment:
The fourth sentence clearly foresees the possibility that a district court may remand a cause to the Secretary for rehearing . . . nonetheless such a remand order is a 'judgment' in the terminology of § 405(g).
Id. at 2664 (emphasis added). The Supreme Court found that in the case before it, the district court's "remand order was unquestionably a 'judgment,' as it terminated the civil action challenging the Secretary's final determination that respondent was not entitled to benefits." Id. (emphasis added). The Supreme Court noted that Congress has the power to define a class of orders as final judgments, and that this is exactly what Congress did in the fourth sentence of § 405(g). Id. The Supreme Court apparently did not consider it relevant that the remand order was not captioned as a "judgment." Id. at 2665 n. 7.
In the context of determining whether a "fourth sentence" remand order constitutes a "final judgment" for purposes of appealability, Finkelstein holds that it does. There is no indication in Finkelstein that a separate document judgment was filed or that such a separate document was necessary to give the remand order "final judgment" status. By analogy, the "fourth sentence" remand order in this case constitutes a "final judgment" for purposes of the EAJA application period, even though a separate document judgment was not filed.
2. Retroactive application of Melkonyan v. Sullivan.
Plaintiff argues that if the February 21, 1991 remand Order did constitute a final judgment, Melkonyan should not be applied retroactively. Plaintiff's position is understandable given the fact that there is no dispute that if Melkonyan is applied retroactively, her EAJA application is untimely.
Under Melkonyan plaintiff would have had to file her EAJA application before May 23, 1991. Melkonyan was not decided until June 10, 1991. Thus even if plaintiff had filed her application on the day after Melkonyan was announced, she would have been too late. Plaintiff relied on the state of the law in the Ninth Circuit, prior to Melkonyan, in deciding when to apply for EAJA fees. Ironically, the then existing Ninth Circuit law was stated in the very case vacated by the Supreme Court in Melkonyan. See Melkonyan v. Heckler, 895 F.2d 556 (9th Cir. 1990), vacated, 111 S. Ct. 2157, 115 L. Ed. 2d 78 (1991). Under the previous Ninth Circuit law, the "final judgment" which started the EAJA clock was the final decision by the administrative agency awarding benefits. Id. at 558-59. In this case, the final administrative decision awarding plaintiff's benefits was announced on August 30, 1991. Under previous Ninth Circuit law, plaintiff's current application for EAJA fees, filed on September 30, 1991, would have been timely.
Plaintiff argues that Melkonyan should be applied prospectively only, citing and applying the test in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S. Ct. 349, 30 L. Ed. 2d 296 (1971). For the past 20 years, the determination of whether a new rule of law announced by the Supreme Court would apply retroactively or only prospectively in civil cases was considered and decided in light of the test established in Chevron Oil. The test in Chevron Oil requires retroactive application of a rule of law only if the rule does not "establish a new principle of law," if retroactive application would not hinder the purposes of the new rule, and if retroactivity would not "produce substantially inequitable results." Id. at 355.
The Supreme Court's recent decision in James B. Beam Distilling Co. v. Georgia, 115 L. Ed. 2d 481, 111 S. Ct. 2439 (1991), now prohibits application of the Chevron Oil analysis in cases where the Supreme Court has already applied a new rule to the parties before it. In Beam the Court held that the rule established in Bacchus Imports Ltd. v. Dias, 468 U.S. 263, 104 S. Ct. 3049, 82 L. Ed. 2d 200 (1984) finding certain discriminatory state taxes to be unconstitutional, was to be applied retroactively to the Beam case because the new rule had been applied to the parties in Bacchus. Although there are five opinions in the Beam case, six justices clearly agreed that where the Supreme Court applies a new principle of law to the parties before it in a civil case, that rule applies to all pending cases.
Federal courts across the nation have grappled with the issue of whether Melkonyan should be applied retroactively. Some courts have applied Melkonyan retroactively,
while other courts have not.
This Court is aware of only one case in this District addressing the issue. In Dempsey v. Sullivan, Civ. No. C-87-4851-CAL Order at 4 (N.D. Cal. Dec. 16, 1991) (Legge, J.), the Court applied Melkonyan retroactively. The Court held that in Melkonyan the Supreme Court applied the rules it announced to the litigants before it, and thus, James Bean compelled retroactive application of Melkonyan. Id.
Plaintiff argues that, in fact, the Supreme Court did not apply the rules it announced in Melkonyan regarding EAJA applications to the litigants before the Supreme Court. Thus plaintiff contends that James Beam does not compel retroactive application. Plaintiff's argument relies on a highly technical reading of Melkonyan. However, this same technical reading was used to support non retroactive application of Melkonyan in Butts v. Bowen, 775 F. Supp. at 1172, 1991 U.S. Dist. Lexis 14356 at *14. The court in Butts noted that Melkonyan was not a fourth sentence remand case and therefore the Supreme Court did not apply the new timeliness rule for fourth sentence remands to the litigants before it. Id. The court concluded that since there was no controlling application of the new fourth sentence rule, it is still an open question whether the Melkonyan rule regarding fourth sentence remands should be applied retroactively. Id.
The remand order at issue in Melkonyan was most likely a sixth sentence remand. However, the Supreme Court remanded the case because it could not state with certainty that the remand was a sixth sentence remand. Melkonyan, supra, at 2165. The Supreme Court instructed that if the district court determined that it was a sixth sentence remand, the Secretary would have to return to the district court and obtain a final judgment. Id. Under those circumstances, the plaintiff in Melkonyan could still make a timely EAJA fee application. There was no suggestion in Melkonyan that the remand might have been a fourth sentence remand. Thus technically, the fourth sentence rule announced in Melkonyan as to when the EAJA clock starts ticking is dicta.
However, in its remand instructions, the Supreme Court stated: "If, on the other hand, this was not a sentence six remand, it may be that petitioner is not entitled to EAJA fees at all." Id. (emphasis in original). It is clear that the Supreme Court required the district court to apply the Melkonyan substantive holding once the remand posture was clarified. There is no reason to suggest that if, by chance, the district court determined the remand to be a fourth sentence remand, the Supreme Court would not require application of the newly announced fourth sentence rules regarding timeliness. Accordingly Melkonyan falls within the holding of James Beam and must be applied retroactively to the plaintiff in this case.
Plaintiff concedes that if Melkonyan controls, her EAJA application is untimely. Given this Court's determination that its remand Order constituted a final judgment and that Melkonyan must be applied retroactively, plaintiff's motion for attorneys' will be denied.
Therefore, the Court hereby ORDERS as follows:
Plaintiff's motion for attorneys' fees pursuant to the Equal Access to Justice Act is DENIED.
IT IS SO ORDERED.
DATED: January 27, 1992.
D. Lowell Jensen
United States District Judge