Source: http://ca10.washburnlaw.edu/cases/2006/11/06-1066a.htm
Timestamp: 2019-02-15 18:49:37
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06-1066a -- Hackett v. Barnhart -- 11/21/2006
| Keyword | Case | Docket | Date: Filed / Added | (59244 bytes) (52676 bytes)
No. 06-1066
(D.C. No. 03-CV-168-LTB)
Ann J. Atkinson, Aurora, Colorado, for Plaintiff-Appellant.
In the underlying administrative decision denying plaintiff's application for social security disability benefits, the Administrative Law Judge (ALJ) mischaracterized the hearing testimony of the vocational expert (VE) when he attempted to satisfy his step-five duties under Haddock v. Apfel, 196 F.3d 1084, 1087 (10th Cir. 1999). The ALJ's error under Haddock was the basis for this court's prior reversal and remand to the district court for a sentence-four remand to the Commissioner. See Hackett v. Barnhart, 395 F.3d 1168, 1174-76 (10th Cir. 2005). Because the ALJ's analysis at step five was not substantially justified, we conclude that plaintiff is entitled to recover all of the EAJA fees that she is seeking, subject to possible reductions by the district court on remand based on a reasonableness analysis.
Plaintiff's argument raises a waiver issue, because, while plaintiff referred to the ALJ's error in her EAJA application, she did not explicitly argue for an award of EAJA fees based on the ALJ's error. Instead, plaintiff focused exclusively on the "legal theory" advanced by the Commissioner in the district court proceedings, arguing that the Commissioner's "position in this litigation was . . . not substantially justified." Aplt. App., Vol. 2 at 154. Although plaintiff subsequently raised the ALJ's error as a basis for an EAJA award in the reply brief that she submitted to the district court, the court did not address plaintiff's reply brief argument in its order denying her EAJA application.
The EAJA statute simply states that a plaintiff's application for fees "shall also allege that the position of the United States was not substantially justified." 28 U.S.C. § 2412(d)(1)(B) (emphasis added). The Supreme Court has held that: (1) this is merely a "pleading requirement"; and (2) a timely filed EAJA application may be amended to satisfy this pleading requirement. See Scarborough v. Principi, 541 U.S. 401, 414, 423 (2004). In Scarborough, the Court explained its reasoning as follows:
Although the Court in Scarborough used the term "pleading requirement," the Court made it clear that the purpose of the requirement is not to provide notice to the government of any substantive arguments or theories of recovery. As the Court stated, "the [not substantially justified allegation] does not serve an essential notice-giving function; the Government is aware, from the moment a fee application is filed, that to defeat the application on the merits, it will have to prove its position was substantially justified." Id. at 416-17. Instead, "EAJA's ten-word 'not substantially justified' allegation is a 'think twice' prescription that 'stem[s] the urge to litigate irresponsibly.'" Id. at 416 (quoting Edelman v. Lynchburg Coll., 535 U.S. 106, 116 (2002)). As the Court explained:
By allocating the burden of pleading "that the position of the United States was not substantially justified"--and that burden only--to the fee applicant, Congress apparently sought to dispel any assumption that the Government must pay fees each time it loses. Complementarily, the no-substantial-justification-allegation requirement serves to ward off irresponsible litigation, i.e., unreasonable or capricious fee-shifting demands. As counsel for the Government stated at oral argument, allocating the pleading burden to fee applicants obliges them "to examine the Government's position and make a determination . . . whether it is substantially justified or not."
In sum, according to Scarborough, § 2412(d)(1)(B) requires only that an EAJA application contain a bare ten-word "allegation" stating that the government's position was not substantially justified, and the statute does not require a plaintiff to set forth any substantive arguments to support the allegation. In addition, as discussed below, once an EAJA application is filed, the government is on notice, based on the plain language of the statute, that it must justify both its position in any underlying administrative proceedings and its position in any subsequent district court litigation. See § 2412(d)(2)(D) (providing that phrase "'position of the United States' means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based"). Accordingly, we conclude that plaintiff's application satisfied the pleading requirement imposed by
§ 2412(d)(1)(B), and that she did not waive the particular argument she now raises when she failed to identify it with specificity in her application.
Aplt. App., Vol. 3 at 34.
An ALJ does have a duty to investigate and obtain a reasonable explanation for any conflict between the DOT and expert testimony before the ALJ may rely on the expert testimony as substantial evidence. Haddock v. [Apfel], 196 F.3d 1084 (10th Cir. 1999). Here, however, no such conflict exists. Although the ALJ stated in his decision that [the VE] had acknowledged that his opinion regarding the jobs Plaintiff could perform do not directly correspond with the DOT, the record is devoid of any such testimony by [the VE]. . . . The record is equally devoid of testimony from [the VE] to support the ALJ's determination that these discrepancies could be explained by his education, experience, and observation of the jobs as performed in the national economy. . . . These statements by the VE may therefore be in error. This error is, however, harmless upon analysis of the applicable DOT provisions.
Following our remand to the district court and the latter's remand to the Commissioner, plaintiff filed her EAJA application in the district court. As noted above, while plaintiff referred to the ALJ's error in her EAJA application, she did not explicitly argue for an award of EAJA fees based on the ALJ's error. Instead, plaintiff focused exclusively on the "legal theory" advanced by the Commissioner in the district court proceedings. Aplt. App., Vol. 2 at 154. The district court denied plaintiff's EAJA application, concluding that "the legal argument advanced by the Commissioner, and the underlying rationale and reasoning, although admittedly complex, is not without basis in the law." Id. at 206.
As the Supreme Court recently reiterated in Scarborough, 541 U.S. at 414, the Commissioner had the burden of proof to show that her position was substantially justified. See Gilbert v. Shalala, 45 F.3d 1391, 1394 (10th Cir. 1995). "The test for substantial justification in this circuit is one of reasonableness in law and fact." Id. Thus, the government's position must be "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565 (1988). The government's "position can be justified even though it is not correct." Id. at 566 n.2.
We review the district court's determination that the Commissioner's position was substantially justified for an abuse of discretion. See Gilbert, 45 F.3d at 1394. "An abuse of discretion occurs when the district court bases its ruling on an erroneous conclusion of law or relies on clearly erroneous fact findings." Kiowa Indian Tribe of Okla. v. Hoover, 150 F.3d 1163, 1165 (10th Cir. 1998).
As defined by EAJA, "'position of the United States' means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based." 28 U.S.C. § 2412(d)(2)(D). The statute further provides that "[w]hether or not the position of the United States was substantially justified shall be determined on the basis of the record (including the record with respect to the action or failure to act by the agency upon which the civil action is based) which is made in the civil action for which fees and other expenses are sought." Id. § 2412(d)(1)(B).
This dichotomy between the position of the United States in the underlying agency action, which means the position of the ALJ in social security proceedings, see Cunningham v. Barnhart, 440 F.3d 862, 863-64 (7th Cir. 2006), and the position of the government in a subsequent civil action/appeal before a district court, is difficult to apply in this case. To begin with, as set forth above, the ALJ in this case made an unreasonable legal/factual ruling at step five, and the ALJ's error at step five was the basis for this court's reversal and remand to the district court for a sentence-four remand to the Commissioner. See Hackett, 395 F.3d at 1174-76. However, in plaintiff's merits appeal to the district court, the Commissioner articulated new legal arguments in defense of the ALJ's step-five reasoning which, while ultimately unsuccessful, were quite reasonable, and the district court subsequently relied on the latter arguments to deny plaintiff's EAJA application. See Aplt. App., Vol. 2 at 205-06.
In Commissioner, INS v. Jean, 496 U.S. 154 (1990), the Supreme Court addressed the question of whether EAJA fees can be awarded to a prevailing plaintiff for time spent in the fee litigation itself (i.e., the proceedings that arise after the government opposes an EAJA application), regardless of whether the government's positions in the fee litigation were substantially justified. Id.
at 156, 157. After analyzing the controlling statutory language, the Court concluded that a second "substantial justification" finding is not required before EAJA fees may be awarded to a prevailing plaintiff for time spent in the fee litigation process. Id. at 162. In reaching this holding, the Supreme Court emphasized that there can only be a "single finding" on the question of substantial justification in any given case that involves both underlying agency proceedings and a district court appeal. As the Court explained:
As argued by the Commissioner in this case, see Aplee. Supp. Br. at 2-3, 5-6, this language suggests that the government may "cure" unreasonable agency conduct by taking a reasonable position in any subsequent civil litigation before a district court.(1)
Moreover, there is other language in Jean that arguably supports this interpretation. See Jean, 496 U.S. at 160, 161 (stating that "[t]he single finding that the Government's position lacks substantial justification, like the determination that a claimant is a 'prevailing party,' thus operates as a one-time threshold for fee eligibility," and that "[a]ny given civil action can have numerous phases. While the parties' postures on individual matters may be more or less justified, the EAJA­like other fee-shifting statutes­favors treating a case as an inclusive whole, rather than as atomized line-items.").
As the Seventh Circuit has recognized, however, the "one threshold determination" language can also be relied on to support the argument that EAJA "fees may be awarded in cases where the government's prelitigation conduct was not substantially justified even though its litigating position may have been substantially justified and vice versa." Marcus v. Shalala, 17 F.3d 1033, 1036 (7th Cir. 1994) (citing Jean, 496 U.S. at 159). "In other words, the fact that the government's litigating position was substantially justified does not necessarily offset prelitigation conduct that was without a reasonable basis." Id.
In fact, as the Ninth Circuit has pointed out, "Jean quoted legislative history of EAJA suggesting that a subsequent litigation position cannot 'cure' an underlying agency action that is not substantially justified." Thangaraja v. Gonzales, 428 F.3d 870, 875-76 n.1 (9th Cir. 2005); see Jean, 496 U.S. at 159 n.7 ("[T]he [1985] amendment [to EAJA defining the phrase 'position of the United States'] will make clear that the Congressional intent is to provide for attorney fees when an unjustifiable agency action forces litigation, and the agency then tries to avoid such liability by reasonable behavior during the litigation.") (quoting H.R. Rep. No. 98-992, pp. 9, 13 (1984)). Indeed, both the Second and the Third Circuits reached this conclusion even before Jean. See Smith ex. rel Smith v. Bowen, 867 F.2d 731, 734 (2d Cir. 1989); Taylor v. Heckler, 835 F.2d 1037, 1040 (3d Cir. 1988); see also Morgan v. Perry, 142 F.3d 670, 684 (3d Cir. 1998) (stating that "unless the government's pre-litigation and litigation positions have a reasonable basis in both law and fact, the government's position is not substantially justified").
Having carefully analyzed this important issue, we believe the Commissioner has misread Jean, and we hold that EAJA "fees generally should be awarded where the government's underlying action was unreasonable even if the government advanced a reasonable litigation position." United States v. Marolf, 277 F.3d 1156, 1159 (9th Cir. 2002). This is only the general rule, however, and, for purposes of this case, we do not need to state categorically that a reasonable litigation position by the government can never "cure" unreasonable agency action. Instead, we limit our holding to the specific circumstances of this case.
In SEC v. Chenery Corp., 332 U.S. 194, 196 (1947), the Supreme Court "emphasized a simple but fundamental rule of administrative law."
This Court has characterized Chenery as establishing a general rule that "we may not properly affirm an administrative action on grounds different from those considered by the agency." Ecology Ctr., Inc. v. United States Forest Serv., 451 F.3d 1183, 1195 (10th Cir. 2006) (quotation omitted); see also Mickeviciute
v. INS, 327 F.3d 1159, 1165 (10th Cir. 2003) (citing Chenery for proposition that "we intrude on the agency's authority . . . by supporting a result reached by the agency with reasoning not explicitly relied on by the agency"). This court has also recognized, however, that
Here, we are not dealing with a "factual matter" that could not have been resolved in any other way, and this is not a situation where the Commissioner simply "suppl[ied] a missing dispositive finding." Id. Instead, in the merits proceedings before the district court, the Commissioner came up with entirely new legal theories in an attempt to reconcile the VE's hearing testimony with the pertinent job descriptions in the Dictionary of Occupational Titles, see Aplt. App., Vol. 1 at 87-89, and the Commissioner's theories were based on "reasoning not explicitly relied on by the [ALJ]," Mickeviciute, 327 F.3d at 1165. Thus, we conclude that the Commissioner was acting in violation of Chenery, and that it would therefore be improper to rely on the Commissioner's litigation position to deny plaintiff's EAJA application.
Aplt. App., Vol. 1 at 35. This error does not meet the reasonableness test for substantial justification. See Gilbert, 45 F.3d at 1394. It would therefore be an abuse of discretion for the district court to deny plaintiff's EAJA application, and a remand on the substantial justification issue is not necessary.
The Commissioner has not challenged plaintiff's computation of her claimed attorney fees. As a result, we could simply remand this matter to the district court for an award of all the EAJA fees that plaintiff has requested. See Golembiewski v. Barnhart, 382 F.3d 721, 723 (7th Cir. 2004). But given the fact that plaintiff's fee award will come out of the public fisc, we believe the better course is to remand this matter to the district court with instructions for the court to consider and determine the reasonableness of the requested fees and the upward cost of living adjustment.
1. The Commissioner is also relying on Jean to argue that her "position" in the underlying proceedings was substantially justified "under the totality of the circumstances," because she prevailed on five of the six issues that plaintiff raised in the district court. See Aplee. Supp. Br. at 8. We disagree. Although the Commissioner is correct that Jean requires this court to treat this case "as an inclusive whole, rather than as atomized line-items," Jean, 496 U.S. at 162, and that an issue-by-issue approach is therefore not appropriate, the fact that the Commissioner prevailed on five of the six issues that plaintiff raised in the district court does not alter our analysis in this case because: (1) plaintiff obtained a sentence-four remand based solely on the Haddock issue; and (2) the other issues on which the Commissioner prevailed were completely unrelated to the Haddock issue, and they did provide a basis for affirming the ALJ's denial of benefits. In other words, the fact that the Commissioner prevailed in the district court on most issues did not alter the fact that she acted unreasonably in denying benefits at the administrative level.
URL: http://ca10.washburnlaw.edu/cases/2006/11/06-1066a.htm.