Davis v. Commissioner, SSA ( 2022 )

Appellate Case: 21-3148 Document: 010110691354 Date Filed: 06/01/2022 Page: 1
FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT June 1, 2022
_________________________________
Christopher M. Wolpert
Clerk of Court
LYNESHA S. DAVIS,
Plaintiff - Appellant,
v. No. 21-3148
(D.C. No. 2:20-CV-02300-JWL)
COMMISSIONER OF SOCIAL (D. Kan.)
SECURITY,
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before MATHESON, KELLY, and CARSON, Circuit Judges.
_________________________________
Lynesha Davis appeals the district court’s order denying her motion for
attorney fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412.
Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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I. BACKGROUND
A. Procedural History
In 2018, Ms. Davis applied for supplemental security income (“SSI”) under
Title XVI of the Social Security Act. An administrative law judge (“ALJ”)
considered her previous 2014 SSI application with her 2018 application. Following a
hearing, the ALJ found Ms. Davis was not disabled under the Act. In his written
decision, the ALJ did not discuss a statement from Ms. Davis’s friend, who reported
that Ms. Davis experienced significant limitations and described symptoms similar to
those Ms. Davis described in her applications. Ms. Davis did not file exceptions to
the ALJ’s decision with the agency’s Appeal Council, and the Appeal Council did not
review the decision on its own motion. The ALJ’s decision was therefore the
Commissioner’s final decision for purposes of judicial review. See 20 C.F.R.
§ 416.1484(d).
Ms. Davis sought district court review of the Commissioner’s decision,
arguing the ALJ erred by not discussing the friend’s statement. In response, the
Commissioner argued the ALJ did not err and, even if he had, any error was harmless
because the same evidence discounting Ms. Davis’s reported symptoms also
discredited the friend’s statement. The district court agreed with Ms. Davis and held
the ALJ’s omission was error, rejected the Commissioner’s harmless error argument,
and remanded for further administrative proceedings (“merits decision”).
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Ms. Davis then filed a motion for attorney fees under the EAJA. The district
court denied the motion, concluding the Commissioner’s litigation position, though
unsuccessful, was substantially justified (“fee decision”).
B. Legal Background
Under the EAJA, the prevailing party in an action brought by or against the
United States is entitled to attorney fees, other expenses, and costs “unless the court
finds that the position of the United States was substantially justified or that special
circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). We have defined
“substantially justified” to mean that the Commissioner’s position was reasonable in
law and in fact. Hackett v. Barnhart, 475 F.3d 1166, 1172 (10th Cir. 2007). “[T]he
government must establish three components to meet this test of reasonableness: a
reasonable basis for the facts asserted; a reasonable basis in law for the legal theory
proposed; and support for the legal theory by the facts alleged.” Harris v. R.R. Ret.
Bd., 990 F.2d 519, 520-21 (10th Cir. 1993).
Under this test, the government’s position must be “justified to a degree that
could satisfy a reasonable person.” Hackett, 475 F.3d at 1172 (quotations omitted).
In other words, the government’s position is substantially justified “if reasonable
people could differ as to the appropriateness of the contested action.” Pierce v.
Underwood, 487 U.S. 552, 565 (1988) (brackets and quotations omitted). Because “a
position can be justified even though it is not correct,” id. at 566 n.2, “it does not
necessarily follow from [a reviewing court’s ruling] vacating an administrative
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decision that the government’s efforts to defend that decision lacked substantial
justification,” Madron v. Astrue, 646 F.3d 1255, 1258 (10th Cir. 2011).
The term “position” in the EAJA includes the ALJ’s position in the underlying
social security proceedings and the agency’s position in a later civil action or appeal
before a district court. Hackett, 475 F.3d at 1172-73. In general, “EAJA fees should
be awarded where the government’s underlying action was unreasonable even if the
government advanced a reasonable litigation position.” Id. at 1174 (quotations
omitted). “But we have recognized an exception when the government advances a
reasonable litigation position that cures” an ALJ’s errors, and that exception applies
“when the Commissioner reasonably (even if unsuccessfully) argues in litigation that
the ALJ’s errors were harmless.” Evans v. Colvin, 640 F. App’x 731, 733 (10th Cir.
2016) (brackets and quotations omitted).1
We review de novo whether the district court used the correct legal standard in
applying the EAJA. Hadden v. Bowen, 851 F.2d 1266, 1268 (10th Cir. 1988). But
“[w]e review the district court’s determination that the Commissioner’s position was
substantially justified for an abuse of discretion.” Hackett, 475 F.3d at 1172. A
district court abuses its discretion when it “bases its ruling on an erroneous
conclusion of law or relies on clearly erroneous fact findings.” Id. In reviewing for
an abuse of discretion, our “role is limited to ensuring that the district court’s
1
We may consider non-precedential, unpublished decisions for their
persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R. 32.1(A).
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discretionary decision did not fall beyond the bounds of the rationally available
choices.” Madron, 646 F.3d at 1257 (quotations omitted).
II. DISCUSSION
Ms. Davis’s arguments fall into two categories. First, she contends the district
court applied the wrong legal standard to award attorney fees. Second, she contends
the court abused its discretion in determining that the Commissioner’s harmless error
argument was substantially justified.
A. The District Court Applied the Correct Legal Standard
Ms. Davis advances four theories to contend the district court applied the
wrong legal standard in ruling on her fee motion. We reject all of them and conclude
that the district court applied the correct standard.
1. Harmless Error Ruling
Ms. Davis maintains that the district court’s rejection of the Commissioner’s
harmless error argument in the merits decision constituted a finding that the argument
was not substantially justified. It follows, she contends, that the court’s fee decision
that the Commissioner’s position was substantially justified “directly contradicts its
original finding.” Aplt. Am. Opening Br. at 22; see also id. at 16 (“The district
court’s first order in the case in chief found that the Commissioner’s . . . litigation
[position] was not substantially [justified.]” (bolding and initial capitalization
omitted)). This argument misunderstands both the district court’s rulings and the
law.
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In its merits decision, the district court concluded that Ms. Davis’s allegations
and the friend’s statement were not so similar that the court could say the same
evidence the ALJ considered in discounting Ms. Davis’s reported symptoms also
discredited the friend’s statement. In its fee decision, the court concluded the
Commissioner was substantially justified in arguing that Ms. Davis’s allegations and
the friend’s statement were similar enough that the ALJ’s stated reasons for
discounting the former also discredited the latter. These conclusions are not
inconsistent. At the EAJA stage, the court found the Commissioner’s position to be
substantially justified, not because the ALJ’s error was harmless, but because it was
not unreasonable to argue that it was harmless. The court determined the
Commissioner’s harmless error arguments drew support based on Evans, other
unpublished Tenth Circuit decisions, and conflicting district court outcomes in cases
in which the government advanced similar harmless error arguments.
Ms. Davis conflates the district court’s merits analysis and its fee analysis.
She urges that her victory at the merits stage compels the conclusion that the
Commissioner’s litigation position was not substantially justified. But that is not the
law. As we explained in Hadden, a standard that equates the merits inquiry with the
substantial justification inquiry “would result in an automatic award of attorney’s
fees in all social security cases in which the government was unsuccessful on the
merits,” 851 F.2d at 1269, and “Congress never intended to adopt this standard,” id.
at 1268. “The government’s success or failure on the merits . . . may be evidence of
whether its position was substantially justified, but that success or failure alone is not
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determinative of the issue.” Id. at 1267. We therefore reject Ms. Davis’s reliance on
the merits decision to secure EAJA attorney fees.
2. Applications of Evans
Ms. Davis contends the district court legally erred by applying Evans in ruling
on her fee application. She contends Evans applies only when the harmless error
question involves an evolving legal principle, and the issue here did not. Her
argument misinterprets Evans.
We recognized in Evans that “[t]he government is more likely to meet [the
substantial justification] standard when the legal principle on which it relied is
unclear or in flux.” 640 F. App’x at 733 (quotations omitted). But we did not
suggest that an unsuccessful harmless error argument based on settled legal
principles cannot be substantially justified for EAJA purposes. Indeed, Evans held
that such an argument is not unreasonable when there are decisions with conflicting
outcomes and the “issue turns on the individual facts of the case.” Id. at 737.
Applying that principle here, the district court pointed to Tenth Circuit
decisions finding no reversible error in an ALJ’s failure to discuss third-party
statements. It also cited conflicting district court outcomes in cases involving similar
issues. And based on that authority, the court determined that the Commissioner’s
position under the facts of this case was substantially justified. See Best-Willie v.
Colvin, 514 F. App’x 728, 736 (10th Cir. 2013) (ALJ’s failure to discuss lay witness
statement was harmless error where the same evidence the ALJ cited in discounting
the claimant’s allegations also discredited the lay witness statement); Brescia v.
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Astrue, 287 F. App’x 626, 630 (10th Cir. 2008) (“While the ALJ did not explicitly
discuss the statements of [claimant’s] sister and friend, we do not believe this
omission is grounds for a remand given the nature of their evidence, which was
largely cumulative.”). We conclude the district court did not err.
3. True Harmless Error Argument
Ms. Davis also contends the district court legally erred in applying Evans
because the Commissioner did not make a “true ‘harmless error’ argument.” Aplt.
Am. Opening Br. at 18. That is, given that “the ALJ offered no explanation at all for
his failure to [c]onsider the third-party” statement, the Commissioner’s argument
“supplie[d] a new factual and/or legal predicate not present in the ALJ’s reasoning.”
Id.
This argument fails because the Commissioner did not present an “entirely new
legal theory . . . based on reasoning not explicitly relied on by the ALJ.” Hackett,
475 F.3d at 1175 (brackets and quotations omitted). Nor did the Commissioner ask the
district court to affirm the ALJ’s decision on grounds different from those considered
by the agency. See id. at 1174-75. Rather, the Commissioner argued that the ALJ’s
error was harmless because other reasoning in his decision supplied sufficient
grounds for affirmance notwithstanding the error. This is a well-established harmless
error argument. See, e.g., Fischer-Ross v. Barnhart, 431 F.3d 729, 734-35 (10th Cir.
2005) (ALJ’s failure to make detailed findings at one step of the sequential analysis
was harmless where findings “made elsewhere in the ALJ’s decision” provided a
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proper basis for his conclusion); see also Best-Willie, 514 F. App’x at 736; Brescia,
287 F. App’x at 630.2
4. Legal Standard Based on Belief
Finally, Ms. Davis argues that the district court erred when it determined that
“the Commissioner was substantially justified in arguing for harmless error on the
basis of [her] belief that although” the friend’s statement and Ms. Davis’s allegations
were not identical, they were similar enough that discrediting the latter also
discredited the former, ROA, Vol. I at 93 (emphasis added). Ms. Davis maintains
that “[t]he correct legal standard does not rely on the Commissioner’s belief,” but
rather on the evidence the ALJ considered and whether a reasonable factfinder would
have decided the same as the ALJ. Aplt. Am. Opening Br. at 24 (quotations omitted).
Ms. Davis’s argument again conflates the district court’s merits review—
applying a substantial evidence standard to the ALJ’s findings—and its substantially
justified EAJA inquiry—asking whether the Commissioner’s litigation position was
substantially reasonable. The district court’s reference to the Commissioner’s
“belief” does not mean the court applied the wrong standard in determining whether
2
In making this argument, Ms. Davis maintains “the Commissioner is
collaterally estopped” from arguing that the agency’s position at the merits stage was
substantially justified because the government “has not shown that neither its
position in the civil action nor its position in the civil action were substantially
justified.” Aplt. Am. Opening Br. at 18. As we understand it, this argument, like her
others, boils down to contending the district court’s merits ruling requires us to find
that the Commissioner’s position lacked substantial justification. But we have
already rejected this argument.
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her position was reasonable. As the Supreme Court explained in Pierce, the legal
question at the EAJA stage “will not be precisely the same as the merits: not what
the law now is, but what the Government was substantially justified in believing it to
have been.” 487 U.S. at 560-61. The district court’s “belief” statement followed its
discussion of what Pierce characterized as “objective indicia” of reasonableness. Id.
at 568. Read in that context, the court’s statement is consistent with application of
the Pierce reasonable person test. See id. at 566 n.2 (explaining that a position is
substantially justified if “a reasonable person could think it correct”). The district
court therefore did not err.
B. The District Court’s Substantial Justification Determination
Was Not an Abuse of Discretion
Ms. Davis contends the district court abused its discretion in finding that the
Commissioner’s position was substantially justified. She challenges the district
court’s conclusion on two grounds, and we reject both.
1. Contrary to Law
Ms. Davis argues the district court’s analysis of the Commissioner’s harmless
error argument was contrary to agency regulations and case law requiring an ALJ to
consider lay witness statements. Ms. Davis is correct that an ALJ must consider
third-party statements, see 20 C.F.R. § 416.926a(b)(3). Also, an ALJ’s decision must
discuss the evidence supporting the decision, uncontroverted evidence the ALJ did
not rely on, and “significantly probative evidence [the ALJ] reject[ed],” Clifton v.
Chater, 79 F.3d 1007, 1010 (10th Cir. 1996). We further agree with Ms. Davis that a
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litigation position that contravenes agency regulations and judicial precedent is not
legally reasonable and thus cannot be substantially justified. See Quintero v.
Colvin, 642 F. App’x 793, 796 (10th Cir. 2016) (cited for persuasive value under
Fed. R. App. P. 32.1; 10th Cir. R. 32.1(A)); see also Harris, 990 F.2d 520-21
(explaining that to be substantially justified, the government’s position must have “a
reasonable basis in law for the legal theory proposed”).
But that said, nothing in the Commissioner’s harmless error argument to the
district court contradicted those rules. The Commissioner did not argue the ALJ was
not required to consider the third-party statement. Rather, she argued that (1) the
ALJ’s failure to discuss the statement was not error because the statement was
neither uncontroverted nor significantly probative, and (2) if the ALJ erred, the
omission was harmless because the statement was cumulative of allegations the ALJ
expressly rejected. We thus find no abuse of discretion in the district court’s
conclusion that the Commissioner’s litigation position, though unsuccessful, was
legally reasonable. See Clifton, 79 F.3d at 1009-10 (recognizing that “the ALJ is not
required to discuss every piece of evidence”); Best-Willie, 514 F. App’x at 736
(ALJ’s failure to discuss third-party statement harmless where decision explained
reasons for rejecting similar evidence); Brescia, 287 F. App’x at 630 (same).
2. Merits and Fee Decisions Conflict
Ms. Davis finally argues the district court’s substantial justification finding in
the fee decision constitutes an abuse of discretion because it conflicts with the merit
decision. This echoes her arguments about the applicable legal standard, which we
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have already rejected. Again, the district court’s merits and fee decisions are not
inconsistent because the Commissioner’s position can be wrong at the merits stage
but substantially justified for EAJA purposes. See Pierce, 487 U.S. at 566 n.2;
Madron, 646 F.3d at 1257-58.
Ms. Davis presents no arguments that would permit us to conclude the district
court’s substantial justification determination in its fee decision “f[e]ll beyond the
bounds of the rationally available choices before” it. Madron, 646 F.3d at 1257(quotations omitted). The court cited ample authority, including Pierce, Madron,
Evans, and Best-Willie, supporting its conclusion that the agency’s position, though
unsuccessful, had a reasonable basis in law. We thus find no abuse of discretion in
that determination.
III. CONCLUSION
Because the district court applied the correct legal standards and did not abuse
its discretion in finding that the Commissioner’s litigation position in district court
on review of the ALJ’s decision was substantially justified, we affirm the order
denying Ms. Davis’s motion for attorney fees.
Entered for the Court
Scott M. Matheson, Jr.
Circuit Judge
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