[00:00:02] Speaker 03:
Our first case today is 2017-1058, Butts versus Wickeys.

[00:00:15] Speaker 03:
Ms.

[00:00:15] Speaker 03:
Tantum?

[00:00:16] Speaker 03:
Tatum?

[00:00:17] Speaker 03:
Tantum?

[00:00:17] Speaker 03:
I'll just say it.

[00:00:18] Speaker 03:
Tantum.

[00:00:18] Speaker 03:
Thank you, Your Honor.

[00:00:19] Speaker 03:
Please proceed.

[00:00:21] Speaker 01:
The Veterans Court erroneously interpreted the Equal Access to Justice Act and applied an erroneous legal standard when it found the Secretary's position in the Butts and Johnson cases not substantially justified at the administrative level.

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The Veterans Court erred in applying a legal standard regarding precedent

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when it concluded that an agency is not substantially justified when it complies with the law confirmed by the Veterans Court's en banc decision.

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In fact, the board must comply with precedent, and a reasonable person at the time would have considered it reasonable for the board to comply with the Veterans Court's Johnson 1 precedent.

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In this court's decision in DGR Associates, the court noted that an agency has to follow

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regulations applicable to it prior to any conclusion about whether those regulations are improperly or incorrectly.

[00:01:23] Speaker 04:
So what do we do about the Patrick opinion, which says the fact that the Veterans Court had previously upheld the VA's erroneous interpretation does not resolve the substantial justification inquiry?

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So I guess the idea I take from that opinion is

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compliance with CAVC precedent without more isn't enough to automatically prove substantial justification.

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Is that a fair understanding?

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I believe that's what the Veterans Court stated.

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Although this... Well, is that a fair understanding of Patrick?

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The quoted language I gave from Patrick.

[00:02:01] Speaker 01:
Yes, I believe so, Your Honor.

[00:02:02] Speaker 01:
Patrick, as we've noted, contains a dicta related to whether a statute, an agency's interpretation of a statute that is later determined to be... But would you agree that the existence of Johnson 1 alone isn't enough to prove substantial justification?

[00:02:28] Speaker 01:
with a court in uh... an essay about that is that a yes or no it's a m uh... it alone can be sufficient and that's what the court and it alone isn't necessarily not necessarily sufficient the court can consider the totality of the circumstances uh... however in in the courts uh... uh... several decisions at the court concluded that

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that reliance on precedent or compliance with precedent and the state of the law at the time.

[00:02:58] Speaker 04:
So a very important factor, right?

[00:03:01] Speaker 04:
It is a very important factor.

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Compliance.

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And the opinion below mentions that.

[00:03:06] Speaker 01:
Yes, Your Honor.

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But this Court, in several decisions, I believe including White, concluded that compliance with precedent and the state of the law at the time alone can be sufficient to find substantial justification

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In this case, it's not simply that there was precedent.

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There was a requirement that the board follow the conclusions in Johnson 1 that the status quo and the VA's treatment of 38 CFR 3.321B1 was correct.

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The Veterans Court in Butts has

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in essence, reach the conclusion that precedent and reliance and compliance with precedent is not a factor that can be part of this substantial justification analysis when there is a dissent.

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And that's despite the fact that this court has certainly explained that a dissent doesn't make a decision any less binding.

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What if there's a different way of reading the

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majority opinion below, which is that number one, the fact that there was CAVC controlling the precedent at the time isn't good enough necessarily to prove substantial justification.

[00:04:28] Speaker 04:
It can be.

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It's an important factor.

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But the opinion below went on and said it's not necessarily a controlling thing, yet there's a totality of circumstances, and it needs to look at that.

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And then in addition, it said

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The plain language of the regulation is clear and that was and that's not just us saying it.

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The Federal Circuit said that and Johnson too.

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And so therefore under a totality of circumstances we conclude that it wasn't substantially justified.

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What would be the error there?

[00:05:10] Speaker 01:
The error is that underlying the Veterans Court's conclusion about precedent is a conclusion about what can be precedent and what can be the state of the law at the time.

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It's undermined by a conclusion that, in fact, when there is a dissent, it isn't a precedential decision.

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It's also undermined by the explanation that if the Secretary could have sought a stay in a separate case with Johnson,

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of Johnson's application to board cases while Johnson was on appeal to this court, that that also undermines the reasonableness at the time of the board's decision to follow the status quo.

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To avoid an award of fees in the IJA case, the secretary would have had to have already moved for a stay in a separate case

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And EGIA has defined the government position as an action of failure act by the agency upon which the civil action was based.

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In this case, the board decision is unrelated to the Johnson actions before the board.

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Another instance of

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Something that wasn't considered by the Veterans Court is the fact that there was an OGC opinion that was binding on the board, and it's cited in the Thune case.

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And 38 USC 7104C makes that OGC opinion binding on the board.

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At the time, it issued the Butts decision, and also in the Johnson case as well.

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The Veterans Court hasn't factored in the language of the adjudication procedures manual, the M21.

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They also refer to an individual disability.

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The manual and Thune, neither of them expressly exclude the possibility of a combination of disabilities.

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It just, it talks about singular disabilities, but it's silent as to combining multiple disabilities of a veteran.

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Is that fair to say?

[00:07:23] Speaker 01:
That's true.

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There is no specific discussion of a collective analysis.

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However, the discussion of the analysis

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that should be done refers to considering the symptomology of the disability and applying it, considering whether the rating is adequate.

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So it's explaining in both Thune and in the OGC opinion and the M21 that the

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practice that must be followed is one that could not be followed if a collective review of symptoms is performed.

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And again, the state of the law that the Veterans Court considered was based on a concurrence.

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Again, the concurrence does not, in some way, take away the impact of the Thune decision and in Butts, the Johnson 1 decision.

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In fact, in Johnson, the court

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pointed out that the Veterans Court has in fact stated that the fact that there was an issue of first impression makes the secretary's position unreasonable when in fact the courts have all explained that it's the opposite.

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The fact that it's an issue of first impression faced by the government makes the position reasonable when they have no precedent to explain that their position is incorrect.

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A case of first impression

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the government's interpretation is always going to be reasonable?

[00:09:00] Speaker 01:
You know, it's more likely that it's a reasonable position.

[00:09:04] Speaker 04:
Not if it's contrary to the plain language.

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Not if, you know, they say green means red or stop means go.

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Even if it was a first impression issue, that wouldn't be reasonable, right?

[00:09:16] Speaker 01:
Well, in DGR, the court noted that the interpretation of a regulation and even plain language, even when the

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the interpretations found to be contrary to plain language, a reasonable person at the time could have found it to be a substantially justified position and reasonable at the time.

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That was a DGR.

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Yes, Your Honor.

[00:09:42] Speaker 04:
But the Veterans Court here had a different rule in front of it that came to a different conclusion.

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Another difference is that this case didn't involve a statute and an interpretation of a statute.

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Instead, it dealt with the interpretation of a regulation.

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At the time of the board's decision, a reasonable person would have thought that the board, especially considering the Veterans Court had affirmed its conclusion, and the deference supported the Secretary's determination regarding

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the meaning of its own regulation.

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And the, again, the stay is a problem because the secretary is not going to be able to know whether in a case where the, I'm sorry, Your Honor, I've actually run into my rebuttal time.

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If you'd like to say that, that's fine.

[00:10:45] Speaker 01:
Yes, Your Honor.

[00:10:46] Speaker 03:
Okay, let's hear from opposing counsel.

[00:10:48] Speaker 03:
I think Mr. Stoltz will be first.

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So you've got 15 minutes on the clock.

[00:11:02] Speaker 03:
You're to use eight.

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It's your responsibility to ensure his time.

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You go over, you're eating into his time, so you understand.

[00:11:08] Speaker 02:
Yes, Your Honor.

[00:11:09] Speaker 02:
Good morning, and may it please the Court.

[00:11:13] Speaker 02:
The Secretary's entire presentation

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and the totality of their briefing.

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In all of that, the Secretary asks this Court to apply law to facts.

[00:11:23] Speaker 02:
The Veterans Court applied the correct totality of the circumstances standard.

[00:11:27] Speaker 04:
Well, I think one of their main arguments is that the Court below had this narrow singular focus on what this Court said in Johnson 2 and then applied that in an exposed way using hindsight.

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to understand the regulation.

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And that's the wrong time frame to be considering this issue.

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And in addition to that, the court didn't actually use the totality of a circumstances test, even though it gave lip service to that.

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So there's two different legal errors right there that it's articulating.

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It isn't just arguing an application of law and fact.

[00:12:08] Speaker 04:
So why don't you answer those two legal arguments?

[00:12:12] Speaker 02:
That's not what the Veterans Court did.

[00:12:14] Speaker 02:
Your Honor, that legal argument carries no water today, because the Veterans Court did not just simply look at Johnson II to reach its decision in Mr. Butz's case.

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They looked at the underlying joint motion for remand.

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They looked at whether there should be a stay.

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They did, in fact, talk about, in a footnote at appendix 11, the fact that the Secretary has misinterpreted the regulation and indeed flouted the plain language of the regulation since 1930.

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The government uses that, I believe they think that that is a strength that the Department of Veterans Affairs and that the Secretary was not following the plain language of the regulation, but in fact it is not.

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They were always wrong.

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Your Honor's hypothetical about red being green and stop being go is precisely what happened here.

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Their interpretation of the regulation was clearly and in fact this Court noted was illogical.

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So the government could not be substantially justified.

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And to your honor's question, it's not the only thing that the court looked at.

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They wrote about, I think one dissent talked about five factors that it acknowledged that the majority went through.

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And they went through more than just what the secretary is saying they did.

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And so at the end of the day,

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They did in fact run through a checklist of totality of circumstances.

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At the end of the day, it is a judgment call, as this court and the Supreme Court has recognized.

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And so it is an application of a lot of fact.

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Your Honor's point about Patrick controlling as well.

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The Veterans Court did in fact run through the entire totality of circumstances test.

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But one major factor.

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as was pointed out in Patrick, is that the plain language controlled the entire time here.

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And so the government will have a hard time proving that it was substantially justified.

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In fact, the joint motion for remand at issue in Mr. Buss's case acknowledged that there was administrative error because it acknowledged that the secretary did not properly comply with section 3.321.

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There's a citation to Johnston 2 in that joint motion for remand, but the language of the remand concedes the error.

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which is very important to Judge Chen's question again, was another factor.

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So the Veterans Court did not just isolate a time period and did not just rely upon Johnson, too.

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It relied upon the plain language of the Joint Motion for Remand had issued in Mr. Buss's case.

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Again, they applied the totality of circumstances test, and the Secretary doesn't like the way it came out with the five judges of the Veterans Court in their decision.

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But the Secretary not liking how it came out is not enough for reversal.

[00:15:03] Speaker 04:
Is there any disagreement about the amount of the fees here?

[00:15:09] Speaker 02:
What is the amount?

[00:15:10] Speaker 02:
The amount of the fees is, there is no disagreement about the amount of the fees that were awarded by the Veterans Court.

[00:15:14] Speaker 02:
3,000, I don't have the exact figure, but they did knock some off, but there's no dispute as to the final tally of what the Veterans Court did.

[00:15:23] Speaker 04:
$3,000?

[00:15:23] Speaker 02:
Yeah, $3,000 and $3,500 I think at the end.

[00:15:27] Speaker 02:
So there's no dispute about the amount.

[00:15:31] Speaker 03:
Anything further?

[00:15:31] Speaker 02:
Thank you.

[00:15:32] Speaker 03:
Mr. Carpenter, is there anything you'd like to add?

[00:15:38] Speaker 00:
A single point that is really more of a reinforcement of the point made by my colleague and that is in relationship to the basis for the decision in Mr. Johnson's case.

[00:15:48] Speaker 00:
The basis for the decision in Mr. Johnson's case was primarily the fact that Johnson won was decided on the issue of ambiguity and it didn't have anything to do with an analysis of

[00:16:01] Speaker 00:
the VA's interpretation until such time as they made the determination that the regulation was ambiguous.

[00:16:10] Speaker 00:
When they made the question or the determination that the regulation was ambiguous, then the Johnson I court looked at it through the lens of whether or not they were or were not required to give deference to the secretary's interpretation.

[00:16:26] Speaker 00:
The secretary was given, based upon a ultimate concurrence by Judge Mormon, a deference because he agreed ultimately that the regulation was ambiguous.

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When this court addressed the question of ambiguity, this court said without qualification that the regulation was not ambiguous on its face.

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And once it is not ambiguous on its face,

[00:16:52] Speaker 04:
it seems to me that the issue of substantial justification and all of the arguments that are attempted to be made by the government in this case fall aside well that that's the exact the point they want to make is that there were a lot of judges court of appeals for veterans that ultimately found this regulation to be ambiguous and so

[00:17:17] Speaker 04:
Assuming everyone in both courts is doing the best they can to try to do an interpretation of this regulation, maybe we should take into account that there was a large number, in fact, a majority of the veteran courts and bank court that found the regulation to be ambiguous.

[00:17:38] Speaker 00:
But with respect, Your Honor, I believe that there is a significant difference at law between the question of ambiguity and the question of the substantial justification for the interpretation made that was given deference to.

[00:17:51] Speaker 00:
What was given deference to is an interpretation that directly conflicts with the plain language.

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It converts red to green.

[00:18:01] Speaker 00:
It cannot convert red to green because the language is unambiguous.

[00:18:06] Speaker 00:
So the interpretation relied upon by the government cannot be, as a matter of law, substantially justified because it goes directly against the plain language of the regulation.

[00:18:20] Speaker 00:
And as the Supreme Court observed in Rivers, once there is a ultimate judicial determination as to the meaning of a statute or a regulation, that's what it meant the entire time, from the 1930s to the present.

[00:18:33] Speaker 00:
and whatever interpretation they may have given was never subject to a binding general counsel's opinion, and was never subject, as the majority in Mr. Johnson's case said, subject to an interpretation by the Veterans Court that accepted that interpretation of 3.321B1.

[00:18:53] Speaker 03:
Is this a fair assessment of your argument?

[00:18:56] Speaker 03:
It's not the case that every time the VA

[00:19:01] Speaker 03:
enacts a regulation or adopts an interpretation with the belief that the statute is ambiguous, that their determination is going to be not substantially justified if it turns out they were wrong, that it's not ambiguous.

[00:19:16] Speaker 03:
It's only if it's not ambiguous and the position they adopt is directly at odds with the plain language.

[00:19:23] Speaker 00:
That's correct.

[00:19:24] Speaker 00:
That the dispositive question is on the question of ambiguity.

[00:19:28] Speaker 04:
is it's positive or is it just one factor in the totality of the circumstance?

[00:19:33] Speaker 04:
You still always have to consider the totality of the circumstances when you're trying to figure out whether the government's position is substantially justified in an EJ act.

[00:19:42] Speaker 00:
In the context of this case, your honor, if this court is going to find that it has jurisdiction to address that question, then I think the correct answer as a matter of law is in all cases, not just a factor.

[00:19:57] Speaker 00:
because as Judge Moore was just describing, what we're talking about here is a regulatory process in which the secretary creates a regulation and then gives an interpretation as it applied it since the 1930s in this case.

[00:20:11] Speaker 00:
That interpretation, as ultimately determined by this court, was found to be in direct opposition to the plain meaning of the words used by the author, the author in this case being the secretary.

[00:20:26] Speaker 00:
And as a consequence, there needs to be that hard rule so the secretary does not get the opportunity to maintain an interpretation.

[00:20:37] Speaker 00:
This court, as I recall, in Gardner made the observation that prior to judicial review, these regulations had lasted a long time without a judicial review.

[00:20:50] Speaker 00:
And as a consequence... Right, right, right.

[00:20:52] Speaker 04:
But what case?

[00:20:53] Speaker 00:
says that the single factor well there there is no such case at that this point rather well actually i would like to see this case disposed of on jurisdictional grounds because i i think as this court has correctly observed the question of substantial justification is quintessential uh... application of law and fact

[00:21:18] Speaker 00:
if the court determines that it has regulation that I believe that that rule is the rule that should be adopted.

[00:21:25] Speaker 00:
Unless there's further questions from the panel.

[00:21:28] Speaker 03:
Thank you, Mr. Governor.

[00:21:29] Speaker 03:
Governor, you have about time.

[00:21:41] Speaker 01:
Your Honour, I'm going to respond quickly to a few points made

[00:21:47] Speaker 01:
About the question of the amount of fees, we wanted to make clear that there were also supplemental EJA awards for time spent litigating the question of EJA.

[00:21:58] Speaker 01:
So there are fees additional to those related to the EJA application itself.

[00:22:05] Speaker 01:
As to the... How much are those?

[00:22:09] Speaker 01:
Excuse me, Your Honor.

[00:22:10] Speaker 02:
What's the number?

[00:22:12] Speaker 01:
I believe in...

[00:22:14] Speaker 01:
In one case, there was an award of roughly $30,000, I believe, that related to, it was certainly much larger than the original IJA award figure.

[00:22:26] Speaker 01:
As for the position that the secretary's position was always wrong and was illogical, and therefore there cannot be a substantial

[00:22:39] Speaker 01:
justification finding.

[00:22:41] Speaker 01:
The court in White found that even where a regulation was invalidated, where there hadn't been any prior adverse reaction to that regulation, the agency was substantially justified in relying on it and in taking that position.

[00:22:58] Speaker 01:
And as for the question of application of law to the federal, we've explained that the Veterans Court is not merely

[00:23:08] Speaker 01:
considering the totality of the circumstances.

[00:23:10] Speaker 01:
They're also taking a position on what is precedent and what's the impact of a Veterans Court decision that the board must follow in the Butts case and in the record and the state of the law in both Butts and Johnson that showed that there had been a consistent practice over time

[00:23:35] Speaker 01:
And in those type of cases, as we pointed out, there is a question of the interpretation of EJA section 2412D2, which refers to what is the record in the case.

[00:23:49] Speaker 01:
And the record in the case can include the agency action upon which the civil action is based.

[00:23:57] Speaker 01:
We believe that there is an interpretation of EJA or a legal standard applied when the Veterans Court

[00:24:03] Speaker 01:
considers what is the proper time frame, which is a question involved in what is the record, an erroneous legal standard when there is a standard applied to the undisputed facts about the fact that there was a decision outstanding in Johnson 1.

[00:24:25] Speaker 01:
As for Patrick, there's a portion of the language in Patrick, which we believe is dicta,

[00:24:32] Speaker 01:
that states that where there is the plain language also unsupported by legislative history.

[00:24:41] Speaker 01:
This shows that Patrick was not simply considering the plain language found after the agency action by a court, but also the legislative history, which would have existed at the time of the agency's action.

[00:24:56] Speaker 01:
And for that reason, we don't believe that Patrick

[00:25:01] Speaker 01:
has the weight that the plaintiffs, I'm sorry, the appellees have given it.

[00:25:06] Speaker 01:
And for these reasons, we request that the court conclude that the Veterans Court's decisions erroneously interpreted EJA and applied an improperly erroneous legal standard.

[00:25:21] Speaker 01:
Thank you.

[00:25:22] Speaker 01:
Thank both counsel.

[00:25:23] Speaker 01:
The case is taken under submission.