MAYER, Circuit Judge.
Phillip E. Wagner appeals from a final judgment of the United States Court of Appeals for Veterans Claims ("Veterans Court") denying his application for supplemental attorney fees incurred in the defense of his initial application for attorney fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. See Wagner v. Shinseki, No. 08-1702, 2010 WL 1583960, 2010 U.S.App. Vet. Claims LEXIS 713 (Vet.App. Apr. 21, 2010). We reverse and remand.
Wagner served in the United States Navy from July 1962 to July 1979 and from March 1982 to March 1988. He appealed to the Veterans Court after the Board of Veterans' Appeals ("board") denied his claim for service-connected benefits for a thyroid disorder. Pursuant to a joint motion of the parties, the Veterans Court vacated the board's decision and remanded the case to the Department of Veterans Affairs for reconsideration.
Wagner subsequently filed an application for attorney fees under the EAJA, arguing that the remand made him a "prevailing party" for purposes of establishing entitlement to an EAJA award. He sought fees of $11,710.57 for 70.3 hours of attorney work. The Secretary of Veterans Affairs conceded that Wagner was a prevailing party for purposes of the EAJA, but challenged the amount of the fee request based on "the reasonableness of the requested fees." See Wagner v. Shinseki, No. 08-1702, 2009 U.S.App. Vet. Claims LEXIS 1791, at *1 (Vet.App. Oct. 14, 2009) (citations and internal quotation marks omitted). Specifically, the Secretary argued that (1) the fee for legal research should be reduced by 14.6 hours because Theodore C. Jarvi, Wagner's attorney, was an experienced veterans' law attorney, and should not have needed to conduct extensive research, (2) the fee for review of Wagner's claim file should be reduced by 8.8 hours because Jarvi had already spent 7.7 hours reviewing the file, and (3) the fee for scanning the claims file and instructing staff on how to combine the files of the record before the agency ("RBA") should be reduced by 4.0 hours since these tasks were purely clerical. Id. at *2-3. Wagner thereafter filed a response, defending his original fee application and requesting additional fees of $4,134.00 for time spent defending the fees that had been challenged by the Secretary.
On October 14, 2009, the Veterans Court granted Wagner an EAJA award of $8,601.80, which was an approximately 26.5 percent reduction from the $11,710.57 he
On October 26, 2009, Wagner filed a revised fee application, seeking $2,458.90 in supplemental fees for time expended defending his original EAJA fee request. Wagner did not seek compensation for time spent on arguments that were rejected by the Veterans Court when it made its original award. He argued, however, that he was partially successful in defending his original fee application, and that he should be compensated for the 10.87 hours he spent successfully responding to the Secretary's challenges to his application as well as for the 4.0 hours he spent reviewing the Veterans Court's decision and drafting the supplemental fee request.
On February 17, 2010, the Veterans Court, in a single judge decision, denied the application for supplemental fees. The court stated that it would "not reward [Wagner] for his efforts to defend his earlier application" since the court had "substantially reduced [Wagner's] original EAJA application after concluding that much of the requested fees were unreasonable." See Wagner v. Shinseki, No. 08-1702, 2010 WL 537140, at *2, 2010 U.S.App. Vet. Claims LEXIS 197, at *3 (Vet.App. Feb. 17, 2010) ("Supplemental Fees Decision"). The court asserted that "[i]t would be anomalous to reduce an [initial EAJA] award by some $3,000 and then award nearly that amount to the losing party simply for putting up a fight." Id.
Wagner thereafter filed a motion seeking panel review of the decision denying him supplemental fees, but the Veterans Court denied this motion on April 21, 2010. Wagner then appealed to this court.
We have jurisdiction over appeals from the Veterans Court under 38 U.S.C. § 7292. Interpretation of the EAJA is a question of law, subject to de novo review.
The primary purpose of the EAJA is to ensure that litigants "will not be deterred from seeking review of, or defending against, unjustified governmental action because of the expense involved." Scarborough v. Principi, 541 U.S. 401, 407, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004) (citations and internal quotation marks omitted). The statute plays a particularly important role in the veterans' adjudicatory system:
Kelly, 463 F.3d at 1353 (citations and internal quotation marks omitted).
"[A]n award of fees incurred in every stage of litigation is consistent with the legislative purpose of the EAJA...." Fritz v. Principi, 264 F.3d 1372, 1377 (Fed.Cir.2001). Thus, a prevailing party in a veterans case is entitled to an award of fees not only for hours devoted to the underlying merits litigation, but also for attorney time reasonably expended defending an initial EAJA application. Comm'r, Immigration & Naturalization Serv. v. Jean, 496 U.S. 154, 161-62, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990) ("Jean"); Fritz, 264 F.3d at 1377. Fees awarded for the defense of an initial fee application are commonly referred to as "supplemental fees" or "fees on fees."
Wagner contends that the Veterans Court misinterpreted 28 U.S.C. § 2412(d)(1)(A) when it denied, in full, his petition seeking supplemental fees. He notes that he was partially successful in defending against the Secretary's challenge to his initial EAJA application, and argues that he should be awarded supplemental fees commensurate with the degree of success he achieved.
We agree. In Jean, the Supreme Court expressly rejected the argument that a claimant could be awarded supplemental fees only if the government's challenge to an initial EAJA application was not substantially justified. 496 U.S. at 158-62, 110 S.Ct. 2316. The Court explained that "[a]ny given civil action can have numerous phases," but that "the EAJA—like other fee-shifting statutes— favors treating a case as an inclusive whole, rather than as atomized line-items." Id. at 161-62, 110 S.Ct. 2316. Recognizing that "requiring courts to make a separate finding of `substantial justification' regarding the Government's opposition to fee requests would multiply litigation," id. at 163, 110 S.Ct. 2316, the Court concluded that only one "threshold" determination that the government's position in the underlying merits litigation was not substantially justified is required, id. at 160, 110 S.Ct. 2316. Accordingly, "a party who prevails in fee litigation under [the] EAJA may recover fees for legal services rendered during the fee litigation even if some of the Government's positions regarding the proper fee were `substantially justified,' i.e., the district court need not make a second finding of no substantial justification before awarding fees for the fee contest itself." Scarborough, 541 U.S. at 419 n. 6, 124 S.Ct. 1856 (citing Jean, 496 U.S. at 160-62, 110 S.Ct. 2316).
When calculating a supplemental fee award, a court is required to consider "the relationship between the amount of the fee awarded and the results obtained" through the initial EAJA application.
Courts should look to the framework established in Hensley, 461 U.S. at 435-39, 103 S.Ct. 1933, when calculating an appropriate supplemental fee award.
Here, Wagner was partially successful in defending against the government's challenge to his initial fee application, and he is entitled to supplemental fees commensurate with the degree of success he achieved.
To be sure, a court has broad discretion in awarding attorney fees, see Hensley, 461 U.S. at 437, 103 S.Ct. 1933, and is not bound, in all cases, to make an award of supplemental fees that is proportionate to the degree of success obtained on the original EAJA application. A litigant is only entitled to "reasonable" attorney fees, 28 U.S.C. § 2412(d)(2)(A), and in fashioning a reasonable supplemental fee award a court may properly discount any "[e]xorbitant" or "unfounded" fee applications. Jean, 496 U.S. at 163, 110 S.Ct. 2316; see also Fritz, 264 F.3d at 1377 (emphasizing that a supplemental fee award can be reduced "to the extent that the applicant ultimately fails to prove justification for each item of fee claimed" or if the fee application is "procedurally defective"). On remand, the Veterans Court will have the opportunity to consider whether such factors warrant a reduction in Wagner's supplemental fee award. If the court decides to discount Wagner's supplemental fee request, however, it needs to provide a reasoned explanation as to why particular attorney hours should be excluded. See Hensley, 461 U.S. at 437, 103 S.Ct. 1933 (explaining that a court must "provide a concise but clear explanation of its reasons for the fee award"); United States v. Eleven Vehicles, Their Equip. & Accessories, 200 F.3d 203, 213 (3d Cir.2000) (emphasizing that a trial court cannot deny supplemental fees without providing an adequate explanation as to why such fees are "excessive, redundant [or] otherwise unnecessary" (citations and internal quotation marks omitted)).
Accordingly, the judgment of the United States Court of Appeals for Veterans Claims is reversed and the case is remanded for further proceedings consistent with this opinion.
Wagner shall have his costs.
28 U.S.C. § 2412(d)(1)(A).
Jean, 496 U.S. at 163 n. 10, 110 S.Ct. 2316.