Davis v. Commissioner, SSA

• Court: Court of Appeals for the Tenth Circuit
• Decided: June 1, 2022
• Docket: 21-3148
• Status: Unpublished

Opinion

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 This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel.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