Court Opinion

ID: 6334615
Source: CourtListenerOpinion
Date Created: 2022-04-25 17:01:03.679344+00
Date Added: 2024-06-11T09:23:40.427309
License: Public Domain

Appellate Case: 21-1033     Document: 010110674996       Date Filed: 04/25/2022     Page: 1
                                                                                   FILED
                                                                       United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                          Tenth Circuit

                              FOR THE TENTH CIRCUIT                           April 25, 2022
                          _________________________________
                                                                          Christopher M. Wolpert
                                                                              Clerk of Court
  DEBORAH FERN RAJO,

        Plaintiff - Appellant,

  v.                                                          No. 21-1033
                                                    (D.C. Nos. 1:19-CV-03010-NRN)
  COMMISSIONER, SSA,                                           (D. Colo.)

        Defendant - Appellee.
                       _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before MORITZ, KELLY, and CARSON, Circuit Judges.
                   _________________________________

       Deborah Fern Rajo appeals from the district court’s orders affirming the denial

 of her application for disability insurance benefits (DIB) and denying her motion for

 post-judgment relief under Fed. R. Civ. P. 59(e). Exercising jurisdiction under

 28 U.S.C. § 1291 and 42 U.S.C. § 405(g), we vacate the district court’s judgment and

 remand for further proceedings consistent with this Order and Judgment.

       *
         After examining the briefs and appellate record, this panel has determined
 unanimously to honor the parties’ request for a decision on the briefs without oral
 argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
 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 This order and judgment is not binding precedent,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: 21-1033   Document: 010110674996        Date Filed: 04/25/2022   Page: 2

                                   BACKGROUND

       Ms. Rajo applied for DIB in May 2014, alleging disability since August 2011

 due to bipolar disorder, depression, fibromyalgia, and neck and back pain. After the

 Social Security Administration (SSA) administratively denied her application,

 Ms. Rajo sought review before an administrative law judge (ALJ). The ALJ held an

 evidentiary hearing in May 2016 and, the following month, issued an unfavorable

 decision, concluding that Ms. Rajo was not disabled. In May 2017, the SSA’s

 Appeals Council denied Ms. Rajo’s request for review. She then sought review in

 district court, and in December 2018, a magistrate judge, proceeding with the parties’

 consent under 28 U.S.C. § 636(c)(1), reversed the ALJ’s decision. The magistrate

 judge concluded that the ALJ failed to consider Ms. Rajo’s non-severe mental

 impairments in determining her residual functional capacity (RFC). See generally

 Wells v. Colvin, 727 F.3d 1061, 1074 (10th Cir. 2013) (noting “[s]tep four of the

 sequential analysis” requires that the ALJ, among other things, “evaluate a claimant’s

 physical and mental RFC” (brackets and internal quotation marks omitted)). The

 magistrate judge therefore remanded the matter for further proceedings.

       Following a remand from the Appeals Council, the ALJ held another

 evidentiary hearing in June 2019. Two months later, he issued an unfavorable

 decision, again concluding that Ms. Rajo was not disabled. The ALJ determined that

 her fibromyalgia and degenerative disc disease of the lumbar and cervical spine were

 severe impairments but that her other conditions, including bipolar disorder, were

 nonsevere impairments. He next determined that Ms. Rajo did not qualify for

                                           2
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 presumptive disability and that she had the RFC to perform a range of medium work,

 as defined in 20 C.F.R. § 404.1567(c), subject to specific limitations. The ALJ

 further concluded that she was unable to perform past relevant work but was able to

 perform other jobs existing in significant numbers in the national economy,

 including: (1) Packager; (2) Laborer, Stores; and (3) Laundry Worker II. Ms. Rajo

 did not submit written exceptions to the Appeals Council, and the Appeals Council

 did not sua sponte review the claim, thus rendering the ALJ’s decision the final

 agency decision. See 20 C.F.R. § 404.984(c)-(d).

        Ms. Rajo then sought review in district court, and in November 2020, the

 magistrate judge, again proceeding with the parties’ consent, affirmed the ALJ’s

 decision. The magistrate judge first rejected Ms. Rajo’s argument that the ALJ’s

 RFC determination was unsupported by substantial evidence because he failed to

 properly weigh the opinions of her treating chiropractor. The magistrate judge next

 rejected her claim, raised for the first time in district court, that under Lucia v. SEC,

 138 S. Ct. 2044 (2018), her case was not adjudicated by a constitutionally appointed

 ALJ and should be remanded for a new hearing before a different ALJ. The

 magistrate judge concluded, relying on our decision in Carr v. Comm’r, SSA,

 961 F.3d 1267 (10th Cir. 2020), that Ms. Rajo’s Appointments Clause claim was

 waived because she did not raise, and thus exhaust, the claim in the administrative

 proceedings. Ms. Rajo sought post-judgment relief under Fed. R. Civ. P. 59(e),

 arguing that Carr was wrongly decided and, alternatively, that the court should stay

 execution of the judgment until the Supreme Court, which had granted the petition

                                             3
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 for certiorari in Carr, ruled on the issue. The magistrate judge denied the motion,

 concluding that Carr was binding and that there was no need to stay the case because

 Ms. Rajo could appeal. This appeal followed.1

                                     DISCUSSION

       Ms. Rajo contends the district court erred by concluding that she waived her

 Appointments Clause claim by not raising it in the administrative proceedings.

 Although the district court properly applied our decision in Carr, the Supreme Court

 later reversed our decision. We therefore vacate the district court’s judgment.2

       In June 2018, after the ALJ’s first unfavorable decision but before the district

 court reversed and remanded the matter back to the agency, the Supreme Court held

 in Lucia, 138 S. Ct. at 2049, that ALJs with the Securities and Exchange Commission

 (SEC) were subject to the Appointments Clause of the Constitution, U.S. Const. art.

 II, § 2, cl. 2. The Court noted that “[t]he Appointments Clause prescribes the

 exclusive means of appointing ‘Officers’” and that “[o]nly the President, a court of

 law, or a head of department can do so.” Lucia, 138 S. Ct. at 2051. The Court

       1
          We granted the parties’ joint motion to stay the appeal pending a ruling by
 the Supreme Court. In April 2021, the Supreme Court reversed our decision in Carr
 and held that an SSA claimant is not required to administratively exhaust an
 Appointments Clause claim. Carr v. Saul, 141 S. Ct. 1352, 1362 (2021). Because
 the parties could not agree on the applicability of that ruling, we lifted the abatement.
       2
         If, on remand, the district court agrees there was an Appointments Clause
 violation, the remedy is a new hearing before a different and properly appointed ALJ.
 See Lucia, 138 S. Ct. at 2055. We therefore decline to address Ms. Rajo’s second
 argument in this appeal: whether the magistrate judge erred in concluding that the
 RFC determination was supported by substantial evidence and that the ALJ did not
 improperly weigh the opinions of her treating chiropractor.
                                             4
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 concluded that SEC ALJs were “Officers of the United States” because they held a

 “continuing office established by law,” exercised “significant discretion when

 carrying out . . . important functions,” possessed “nearly all the tools of federal trial

 judges,” and often had the last word in SEC proceedings. Id. at 2053-54 (internal

 quotation marks omitted). The Court further held that “[t]he appropriate remedy for

 an adjudication tainted with an appointments violation is a new hearing before a

 properly appointed official,” because the judge who “heard [the] case and issued an

 initial decision on the merits,” “even if he has by now received (or receives sometime

 in the future) a constitutional appointment,” “cannot be expected to consider the

 matter as though he had not adjudicated it before.” Id. at 2055 (internal quotation

 marks omitted).

        In July 2018, the Acting SSA Commissioner responded to Lucia by appointing

 the SSA’s ALJs. See SSR 19-1p, 84 Fed. Reg. 9582-02, 9583 (Mar. 15, 2019). The

 SSA also adopted a rule describing how it intended to “adjudicate cases pending at

 the Appeals Council in which the claimant has raised a timely challenge” under

 Lucia. Id. at 9582. However, the question soon arose whether an Appointments

 Clause claim needed to be raised in the administrative proceedings or whether the

 claim could be raised for the first time in district court.3 Our court held that an

        3
          In Lucia, the Court explained “that one who makes a timely challenge to the
 constitutional validity of the appointment of an officer who adjudicates his case is
 entitled to relief.” 138 S. Ct. at 2055 (internal quotation marks omitted). And the
 Court held that Lucia, who raised the issue before the agency, “made just such a
 timely challenge.” Id.
                                             5
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 Appointments Clause claim is waived if not raised in the agency proceedings,

 consistent with “the general principle that an issue must have been raised before an

 agency for a party to seek judicial review of agency action on that issue.” Carr,

 961 F.3d at 1268, 1276 (internal quotation marks omitted). The Eighth Circuit

 agreed. Davis v. Saul, 963 F.3d 790, 791 (8th Cir. 2020). But three circuits held that

 Appointments Clause claims did not need to be administratively exhausted. See

 Probst v. Saul, 980 F.3d 1015, 1018 (4th Cir. 2020), cert. denied, 141 S. Ct. 2633

 (2021); Ramsey v. Comm’r, SSA, 973 F.3d 537, 539 (6th Cir. 2020), cert. denied,

 141 S. Ct. 537 (2020); Cirko ex rel. Cirko v. Comm’r, SSA, 948 F.3d 148, 152

 (3d Cir. 2020). The Supreme Court resolved the circuit split in favor of the latter

 courts. Carr v. Saul, 141 S. Ct. 1352, 1356-57 (2021). The Court declined to

 “impose a judicially created issue-exhaustion requirement” on Appointments Clause

 claims, id. at 1358, and held that “claimants who raise those issues for the first time

 in federal court are not untimely in doing so,” id. at 1362.

        The sole basis for the district court’s rejection of Ms. Rajo’s Appointments

 Clause claim was that she waived the claim by not exhausting it in the administrative

 proceedings. But under the Supreme Court’s decision in Carr, Ms. Rajo was

 permitted to raise the claim for the first time in federal court.

        The Commissioner does not defend the district court’s waiver determination.

 Instead, the Commissioner contends the district court’s decision should be affirmed

 because Ms. Rajo’s Appointments Clause claim lacks merit. Specifically, the

 Commissioner argues that the ALJ had been properly appointed prior to the 2019

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 administrative proceedings and that it “is of no moment” that the ALJ heard the case

 in 2016, before being properly appointed, because that ruling “was vacated” and “is

 simply not before this Court.” Aplee. Br. at 29-30.4

       “Although this court may affirm on any ground apparent in the record,

 affirming on legal grounds not considered by the trial court is disfavored.” Rimbert

 v. Eli Lilly & Co., 647 F.3d 1247, 1256 (10th Cir. 2011). This court has been

 especially reluctant to affirm on alternative grounds when, as here, “we are deprived

 of the benefit of vigorous adversarial testing of the issue, not to mention a reasoned

 district court decision on the subject.” United States ex rel. Reed v. KeyPoint Gov’t

 Sols., 923 F.3d 729, 763 n.17 (10th Cir. 2019) (internal quotation marks omitted).

 We therefore remand the matter to the district court for further consideration of

 Ms. Rajo’s Appointments Clause claim.5

       4
         The Commissioner states that the district court vacated the ALJ’s 2016
 decision. See Aplee. Br. at 29. The record indicates that the district court reversed
 and remanded the matter, Aplt. App. vol. 3 at 640-41, and the Appeals Council, on
 remand, vacated the ALJ’s original decision, id. at 644.
       5
          We observe that the district courts are divided over the merits of an
 Appointments Clause claim when an ALJ was appointed between an initial hearing
 and decision and a subsequent hearing on remand. The Commissioner notes that two
 courts found no violation under such circumstances. See Camille B. v. Kijakazi,
 No. 2:20cv262, 2021 WL 4205341, at *2-3 (E.D. Va. Sept. 15, 2021); Govachini v.
 Comm’r, SSA, No. 19-1433, 2020 WL 5653339, at *1 n.1 (W.D. Pa. Sept. 23, 2020);
 see also Dennis L. v. Comm’r, SSA, No. C20-5170-MLP, 2020 WL 6343321, at *5
 (W.D. Wash. Oct. 29, 2020), remanded sub nom. Leduc v. Kijakazi, No. 20-36117,
 2021 WL 5860759, at *1 (9th Cir. Oct. 14, 2021). Several courts have concluded
 otherwise, reasoning that, notwithstanding an ALJ’s appointment after the claimant’s
 original hearing, the ALJ’s participation in subsequent proceedings “continued—
 rather than cured—the constitutional violation attendant to the first decision.” James
 R. v. Comm’r, SSA, No. C20-5632-SKV, 2021 WL 4520560, at *7 (W.D. Wash. Oct.
                                            7
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                                  CONCLUSION

       The district court’s judgment is vacated and remanded for further proceedings

 consistent with this Order and Judgment.

                                            Entered for the Court

                                            Nancy L. Moritz
                                            Circuit Judge

 4, 2021); accord Misty D. v. Kijakazi, No. 3:18-CV-206, 2022 WL 195066, at *3
 (N.D.N.Y. Jan. 21, 2022); Cuminale v. Saul, No. 20-61004-CIV, 2021 WL 6010499,
 at *3 (S.D. Fla. Oct. 15, 2021), adopted, 2021 WL 5409967 (S.D. Fla. Nov. 19,
 2021); Mary D. v. Kijakazi, No. 3:20-CV-656 (RAR), 2021 WL 3910003, at *10-11
 (D. Conn. Sept. 1, 2021); Welch v. Comm’r, SSA, No. 2:20-CV-1795, 2021 WL
 1884062, at *3-5 (S.D. Ohio May 11, 2021), adopted, 2021 WL 2142805 (S.D. Ohio
 May 26, 2021). We express no opinion on the merits of these decisions.
                                            8