Opinion ID: 6345773
Heading Depth: 3
Heading Rank: 4

Heading: Legal Standard Based on Belief

Text: 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. 9 Appellate Case: 21-3148 Document: 010110691354 Date Filed: 06/01/2022 Page: 10 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 10 Appellate Case: 21-3148 Document: 010110691354 Date Filed: 06/01/2022 Page: 11 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 11 Appellate Case: 21-3148 Document: 010110691354 Date Filed: 06/01/2022 Page: 12 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.