One of the frequent issues that comes up in the practice of law when fee shifting to the losing side becomes an issue concerns the question of recoverability of fees. Many cases involve more than one issue and the prevailing party sometimes wins on all, some, or just one issue. Sometimes the court reaches all the issues up or down, but with some degree of regularity does not decide all the issues. The Ninth Circuit decisin in Hardisty v. Astrue decided in January 2010. This post explores my opinions and observations on the case in particular and the subject in general.
Wednesday, December 21, 2011
Hardisty v. Astrue-- EAJA and Unreached Issues
1. Hardisty v. Astrue, the Boundaries of the Decision
Hardisty v. Astrue, 592 F.3d 1072 (9th Cir. 2010) cert. denied ___ U.S. ___ (2010) stands for the proposition that the Court should not consider issues it did not decide in determining substantial justification. The Court’s reasoning is that fee litigation should not create satellite litigation and that determining substantial justification on unreached issues would necessarily require deciding those issues on the merits first. In a case where the plaintiff prevailed, the Court decides whether the Commissioner was substantially justified administratively and in Court on the issues that the Court actually reached.
In Casey v. Astrue, 2010 WL 2925094, *2 (E.D. Cal. 2010), the District Court did reduce the time paid by 6 hours for issues not reached, relying on Hardisty. The Court reasoned that it should not pay for time expended on issues not reached. That constitutes an over-reading of Hardisty. The Ninth Circuit held that issues not reached cannot form part of the calculus of whether to pay fees under the substantial justification analysis. The issue of whether the Court should pay for such time became moot once the Court reached the issue before it in the negative. Any reading of Hardisty for the proposition that the Court can or should deny fees for issues not reached or issues decided adversely to the plaintiff violates the law of the circuit. See Natural Resources Defense Council, Inc. v. Winter, 543 F.3d 1152, 1162 (9th Cir. 2008) citing Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Sorenson v. Mink, 239 F.3d 1140, 1147 (9th Cir. 2001). Even in the event of limited success, the prevailing plaintiff recovers a full fee absent some special circumstance under the Equal Access to Justice Act. For instance, raising a frivolous issue might satisfy the special circumstance question.
Even if Hardisty wrote on a blank slate, a reading foreclosing compensation for some issues would not constitute the law of the circuit. United States v. Johnson, 256 F.3d 895, 914 (9th Cir. 2001) (en banc) (opinion of Kozinski,.J.) (plurality) holds that:
where a panel confronts an issue germane to the eventual resolution of the case, and resolves it after reasoned consideration in a published opinion, that ruling becomes the law of the circuit, regardless of whether doing so is necessary in some strict logical sense.
The question of what could be paid in Hardisty was never germane to the question of whether Hardisty could overcome the Commissioner’s affirmative defense of substantial justification on the issue reached by the District Court in that case. It would constitute an anomalous state indeed where a plaintiff could recover for an issue on which he lost under Winter and Sorenson but not recover on an issue that the Court did not reach. The Court should reject the Casey extension of Hardisty as unwarranted and not justified by any part of the Hardisty opinion germane to the resolution of the issue before the Ninth Circuit in that case.
2. Reasonableness of Time Expended
The crux of the Commissioner’s position is that plaintiffs should not recover fees for time not reasonably expended. Certainly the Commissioner cannot press on the plaintiffs’ bar the prescience to know which issues the Court will decide first or place upon them the Hobbesian choice of waiving certain issues on the belief that another issue will win the day. In the case of limited success, the Court should use the same paradigm whether the plaintiff lost outright on an issue or the Court chose not to decide an issue: was the plaintiff reasonable in briefing that issue? The failure to prevail raises a threshold question but does not resolve the issue. The failure to reach an issue does not cut either way.
The Court should use an ad hoc analysis to determine reasonableness of time expended. The issue is fact dependent. Time spent testing the sufficiency of an articulation may frequently be reasonable. The case of Hardisty provides an illustrative analysis. Assuming arguendo that the Court had decided that the Commissioner lacked substantial justification, the question that would arise is whether the plaintiff reasonably expended time addressing the treating and other physician testimony. The two issues have clear commonality. Whether the ALJ articulated specific and legitimate or clear and convincing reasons for rejecting that testimony would necessarily require consideration of the medical baseline, i.e. by how much does the plaintiff’s complaints of limitation exceed the objectively based limitations? In Hardisty, a reasonable plaintiff’s lawyer would either have to include a full discussion of the medical evidence inside of the excess pain analysis or segregate that discussion into an issue of the treatment of the opinion evidence. Briefing or not briefing the opinion evidence would save little time and potentially provide a more confusing or convoluted presentation. Similarly, the plaintiff that prevails on a treating physician opinion must prove up that the boilerplate allegation that the physician merely regurgitated the subjective complaints requires a full consideration of the plaintiff’s testimony.
The majority of the Social Security docket come before the Court at step 4 of the sequential evaluation process. Did the ALJ properly consider and determine the plaintiff’s residual functional capacity? That is the issue. The knife that cuts through that issue comes in two basic serrations: expert opinion evidence and lay evidence. Within those two broad classifications, there are at least seven forms of evidentiary distinction. Because those issues blend together under Reddickv. Chater, 157 F.3d 715, 725 (9th Cir. 1998) (rejecting the quantum of evidence approach), the circumstance where the government lacked substantial justification on one of the seven variations of residual functional capacity evidence and the plaintiff was unreasonable in briefing together or separately one or more of the other six variations should prove rare.
More likely candidates for reasonableness analysis exist in the step 4 or 5 analysis of the ability to perform past relevant work or other work. These two issues rely on the completeness of the hypothetical question or the variation of the vocational testimony from the DOT. These issues always assume the adequacy of the ALJ’s determination of residual functional capacity. When the plaintiff prevails on the ability to engage in substantial gainful activity question, it is more likely that the plaintiff may have unreasonably briefed the residual functional capacity issue on the first half of the step 4 analysis.
The same kind of analysis holds true in the briefing of a step 2 medically determinable severe impairments question or a step 3 listings question. Those issues have common facts but completely different legal principles than does a residual functional capacity issue. Prevailing on step 2 medically determinable severe impairments question or a step 3 listings question would rarely if ever result in a finding that the plaintiff was unreasonable in questioning the residual functional capacity assessment at step 4. Failing to prevail at step 2 medically determinable severe impairments question or a step 3 listings question but prevailing on the residual functional capacity question would leave open a question of reasonableness for case-by-case determination.
3. A Rough Application of Hardisty and Reasonableness
When a plaintiff prevails at a lower step of the sequential evaluation process, it would present a rare case that the plaintiff unreasonably briefed issues at a higher step of the sequential evaluation process. Prevailing at steps 2 or 3 of the sequential evaluation process implies error at steps 4 or 5 of the sequential evaluation process as based on a legally or factually infirm foundation. Although the burden of proof of reasonableness remains with the plaintiff, the burden of persuasion would shift to the Commissioner.
When the Court is convinced that the classification of an impairment as either not medically determinable or non-severe at step 2 of the sequential evaluation process constitutes a material error in the adjudication of the claim, the Court should rarely proceed to consider the remaining steps of the sequential evaluation process unless the Court intends to order the payment of benefits on one or more of those issues.
When the plaintiff prevails at a higher step of the sequential evaluation process and loses at the lower steps of the sequential evaluation process, the burden of proof and the burden of persuasion on the question of reasonableness would still remain with the plaintiff.
Where the Court is convinced that the independent step 5 analysis resulted in a finding of ability to engage in substantial gainful activity arose out of legal error, the Court should never ignore the step 4 residual functional capacity question unless it is clearly frivolous or the Court is ordering the payment of benefits.