Bly v. McDonald, docket no. 15-0502(E) (Oct. 7, 2016), overruled, Bly v. Shulkin, docket no. 17-1287 (Fed. Cir. Mar. 2, 2018)

HELD: The 30-day appeal period to file an EAJA application is subject to equitable tolling, but the person seeking equitable tolling must show (1) that he has pursued his rights diligently and (2) that extraordinary circumstance prevented timely filing.  

SUMMARY: On January 5, 2016, the Court granted the parties’ joint motion for remand. In its order, the Court stated “this order is the mandate of the Court,” meaning that the Court’s judgment became “final.” On February 5, 2016 – 31 days after the Court’s order – Mr. Bly submitted his application for attorney fees under the Equal Access to Justice Act (EAJA). Because an EAJA application must be filed within 30 days of the Court’s final judgment, the Court ordered Mr. Bly to show cause as to why his application should not be dismissed.

Mr. Bly contended that the application was timely, and alternatively argued that the deadline should be equitably tolled. The Court sent this case to panel to determine whether equitable tolling applies to EAJA applications and, if so, what standard should be applied.

The parties agreed that equitable tolling applies to EAJA applications, but disagreed on the appropriate standard to apply to determine whether equitable tolling is warranted in these cases. Mr. Bly argued that the Court should adopt a standard in which it only asks “whether a veteran would be financially harmed without tolling and whether the Government would be prejudiced by tolling.” The Secretary asserted that the Court should apply the same standard as the general test for equitable tolling, which inquires as to “whether an extraordinary circumstance prevented the timely filing despite due diligence.”

The Court first determined that Mr. Bly’s EAJA application was untimely, rejecting his argument that “final judgment had not entered and he still had time to appeal.” The Court found this argument to be “incorrect as a matter of law,” since the EAJA statute defines “final judgment” to include “an order of settlement” and the Court’s rules provide that judgment is effective when the Court “order states that it constitutes the mandate of the Court.” The Court’s order, in Mr. Bly’s case, expressly stated that “this order is the mandate of the court.” U.S. Vet.App. R. 41(b). In addition to the EAJA statute and the Court’s own rules, the Court also pointed to its precedential caselaw stating that “an order granting a joint motion for remand . . . is final and not appealable.”

Next, the Court determined that “the doctrine of equitable tolling may be applied to the 30-day time limit for filing an EAJA application.” The Court rejected Mr. Bly’s arguments regarding the standard to apply, finding that applying his proposed standard “would essentially swallow the statutory rule that an EAJA application is due within 30 days of final judgment.” The Court explained that to base an equitable tolling determination on the question of whether a veteran would be financially harmed if the EAJA petition were dismissed, could apply to “virtually every case where an EAJA application is untimely filed.” The Court found that Mr. Bly had not shown extraordinary circumstance or due diligence to warrant equitable tolling.

Finally, Mr. Bly had also argued that dismissing his EAJA application would result in a potentially smaller retroactive award to the veteran, if the veteran is awarded benefits on remand. This is because any contingent attorney fee would have been offset dollar for dollar by the EAJA amount, resulting in a higher award for the veteran. The Court rejected this argument, noting that the Secretary and the Court both have the authority to review attorney fee agreements for reasonableness. The Court expressly directed the Secretary to consider the holding in this case when assessing the reasonableness of any potential attorney fees that result on remand.

Judge Greenberg concurred with the portion of the decision that held that the 30-day EAJA filing period is subject to equitable tolling, but dissented from the holding that equitable tolling was not warranted in this case. He emphasized the importance of encouraging lawyers to represent veterans and noted that the application was only one day late and there was “no evidence of prejudice to the Secretary as a result of that delay.” Judge Greenberg stated that “[p]enalizing an attorney for filing 1 day late where there is no prejudice to the Government, not only unnecessarily penalizes the veteran, but also may have chilling effects on worthy veterans obtaining adequate representation.”