Court Opinion

ID: 6345773
Source: CourtListenerOpinion
Date Created: 2022-06-01 17:00:32.151675+00
Date Added: 2024-06-11T09:15:05.054806
License: Public Domain

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 This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral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.
Appellate Case: 21-3148   Document: 010110691354        Date Filed: 06/01/2022      Page: 2

                                 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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