Schultz v. Commissioner of Social Security

Filing 25

ORDER signed by Magistrate Judge Edmund F. Brennan on 09/19/18 GRANTING IN PART 21 Motion for Attorney Fees; plaintiff is awarded attorney's fees under the EAJA in the amount of $6,034.86. (Benson, A.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MICHAEL JOHN SCHULTZ,

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Plaintiff,

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No. 2:15-cv-933-EFB

v.

ORDER

NANCY BERRYHILL, Acting
Commissioner of Social Security,
Defendant.

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Plaintiff moves for an award of attorneys’ fees under the Equal Access to Justice Act

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(“EAJA”), 28 U.S.C. § 2412(d)(1). ECF No. 21. He seeks fees in the amount of $6,034.86 based

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on 29.6 hours of work performed by counsel in 2015 at the rate of $190.28 per hour and 2.1 hours

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of work performed in 2016 at the rate of $191.70 per hour. ECF No. 21 at 3-4; see ECF No. 21-1.

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The Commissioner does not contend that the hourly rate is unreasonable, nor does she argue that

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the amount of hours claimed is excessive.1 Rather, defendant argues that plaintiff is not entitled

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to fees under the EAJA because the Commissioner’s position was substantially justified. ECF

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No. 23. For the reasons explained below, plaintiff’s motion is granted.

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The court has independently reviewed the hourly rates sought and number of hours
expended and finds that they are reasonable.
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The EAJA provides that a prevailing party other than the United States should be awarded

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fees and other expenses incurred by that party in any civil action brought by or against the United

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States, “unless the court finds that the position of the United States was substantially justified or

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that special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1). “[T]he ‘position of

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the United States’ means, in addition to the position taken by the United States in the civil action,

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the action or failure to act by the agency upon which the civil action is based.” Gutierrez v.

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Barnhart, 274 F.3d 1255, 1259 (9th Cir. 2001) (citing 28 U.S.C. § 2412(d)(2)(D) and Comm’r,

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INS v. Jean, 496 U.S. 154, 159 (1990) (explaining that the “position” relevant to the inquiry “may

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encompass both the agency’s prelitigation conduct and the [agency’s] subsequent litigation

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positions”)). Therefore, the court “must focus on two questions: first, whether the government

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was substantially justified in taking its original action; and, second, whether the government was

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substantially justified in defending the validity of the action in court.” Kali v. Bowen, 854 F.2d

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329, 332 (9th Cir.1988). The burden of establishing substantial justification is on the

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government. Gardner v. Berryhill, 856 F.3d 652, 656 (9th Cir. 2017).

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A position is “substantially justified” if it has a reasonable basis in law and fact. Pierce v.

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Underwood, 487 U.S. 552, 565-66 (1988); United States v. Marolf, 277 F.3d 1156, 1160 (9th Cir.

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2002). Substantially justified has been interpreted to mean “justified to a degree that could satisfy

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a reasonable person” and “more than merely undeserving of sanctions for frivolousness.”

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Underwood, 487 U.S. at 565; see also Marolf, 277 F.3d at 161. The mere fact that a court

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reversed and remanded a case for further proceedings “does not raise a presumption that [the

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government’s] position was not substantially justified.” Kali, 854 at 335; see also Lewis v.

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Barnhart, 281 F.3d 1081, 1084-86 (9th Cir. 2002) (finding the defense of an ALJ’s erroneous

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characterization of claimant’s testimony was substantially justified because the decision was

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supported by a reasonable basis in law, in that the ALJ must assess the claimant’s testimony and

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may use that testimony to define past relevant work as actually performed, as well as a reasonable

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basis in fact, since the record contained testimony from the claimant and a treating physician that

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cast doubt on the claimant’s subjective testimony); Le v. Astrue, 529 F.3d 1200, 1201-02 (9th Cir.

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2008) (finding that the government’s position that a doctor the plaintiff had visited five times over
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three years was not a treating doctor, while incorrect, was substantially justified since a

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nonfrivolous argument could be made that the five visits over three years were not enough under

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the regulatory standard especially given the severity and complexity of plaintiff's alleged mental

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problems).

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However, when the government violates its own regulations, fails to acknowledge settled

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circuit case law, or fails to adequately develop the record, its position is not substantially justified.

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See Gutierrez, 274 F.3d at 1259-60; Sampson v. Charter, 103 F.3d 918, 921-22 (9th Cir. 1996)

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(finding that the ALJ’s failure to make necessary inquiries of the unrepresented claimant and his

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mother in determining the onset date of disability, as well as his disregard of substantial evidence

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establishing the same, and the Commissioner’s defense of the ALJ’s actions, were not

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substantially justified); Flores v. Shalala, 49 F.3d 562, 570, 572 (9th Cir. 1995) (finding no

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substantial justification where ALJ ignored medical report, both in posing questions to the VE

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and in his final decision, which contradicted the job requirements that the ALJ deemed claimant

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capable of performing); Corbin v. Apfel, 149 F.3d 1067, 1053 (9th Cir. 1998) (finding that the

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ALJ’s failure to determine whether the claimant’s testimony regarding the impact of excess pain

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she suffered as a result of her medical problems was credible, and whether one of her doctors’

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lifting restrictions was temporary or permanent, and the Commissioner’s decision to defend that

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conduct, were not substantially justified); Crowe v. Astrue, 2009 WL 3157438, *1 (E.D. Cal.

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Sept. 28, 2009) (finding no substantial justification in law or fact based on ALJ’s improper

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rejection of treating physician opinions without providing the basis in the record for so doing);

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Aguiniga v. Astrue, 2009 WL 3824077, *3 (E.D. Cal. Nov.13, 2009) (finding no substantial

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justification in ALJ’s repeated mischaracterization of the medical evidence, improper reliance on

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the opinion of a non-examining State Agency physician that contradicted the clear weight of the

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medical record, and improperly discrediting claimant’s subjective complaints as inconsistent with

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the medical record).

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Here, the matter was remanded based on the ALJ’s failure to provide legally sufficient

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reasons for discounting plaintiff’s credibility. The ALJ discounted the credibility of plaintiff’s

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subjective complaints because: (1) the ALJ viewed plaintiff’s described daily activities as
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inconsistent with claims of disabling symptoms; and (2) the ALJ concluded that plaintiff’s

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allegations were inconsistent with the medical evidence of record. Administrative Record (“AR”)

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25-26.

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As for the first reason, the ALJ noted that plaintiff alleged that he experiences involuntary

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movements, depression, and anxiety, but testified that he goes to the grocery store, spends his

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days watching television, and performing chores, including doing dishes, watering plants, and

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doing laundry. In finding that reason insufficient, the court explained that there is no apparent

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inconsistency with plaintiff’s allegations of experiencing involuntary movements, depression, and

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anxiety and his ability to perform the activities identified by the ALJ. ECF No. 19 at 11.

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Furthermore, the limited activities discussed by the ALJ failed to demonstrate an ability to

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perform full-time work on a sustained basis. Id.; see Fair v. Bowen, 885 F.2d 597, 603 (9th Cir.

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1989) (“[M]any home activities are not easily transferable to what may be the more grueling

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environment of the workplace, where it might be impossible to periodically rest or take

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medication.”). Because the only other reason for rejecting plaintiff’s testimony—that plaintiff’s

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allegations were inconsistent with the medical evidence of record—could not be the sole basis for

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the adverse credibility finding, the ALJ erred in rejecting plaintiff’s subjective complaints. ECF

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No. 19 at 11; see Burch v. Barnhart, 400 F.3d 676, 681 (9th Cir. 2005) (“[A]n ALJ may not reject

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a claimant’s subjective complaints based solely on a lack of medical evidence to fully

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corroborate” the complaints).

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The Commissioner argues that the fact that the court agreed that the ALJ on a separate

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issue that was not the basis for remand (i.e., that the ALJ properly assessed the medical opinion

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evidence) “strongly shows that the ALJ’s decision and [the government’s] overall litigation

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position were substantially justified.” ECF No. 23 at 5. The argument fails to appreciate the

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scope of the “substantial justification” inquiry. “In determining whether a party is eligible for

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fees under EAJA, the district court must determine whether the government’s position regarding

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the specific issue on which the district court based its remand was ‘substantially justified’ . . . .”

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Gardner v. Berryhill, 856 F.3d 652, 656 (9th Cir. 2017). Thus, the pertinent issues for purposes

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of the present motion is whether the government was substantially justified in its position that

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plaintiff’s subjective complaints were not credible.

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The Commissioner also argues that the ALJ was substantially justified in concluding that

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plaintiff’s reported activities were inconsistent with his allegations of debilitating mental

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impairments. ECF No. 23 at 7. She notes that plaintiff reported that “[l]arge crowds would lead

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to my anxiety and panic attacks, followed by Tourette-tics,” which is inconstant with his

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testimony that he attended a professional baseball game with his family. ECF No. 23 at 7 (citing

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AR 51, 186, 209). Likewise, the Commissioner also notes that plaintiff alleged disability due to

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involuntary movements, but that no such movements were documented during examinations in

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April 2012 and March 2013. Id. The problem with the Commissioner’s argument is that the ALJ

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did not conclude that plaintiff’s ability to attend a baseball game or observations during two

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examinations undermined his allegations of debilitating mental impairments.

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The ALJ was required to “specifically identify the testimony she . . . finds not to be

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credible and . . . explain what evidence undermines the testimony.” Holohan v. Massanari, 246

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F.3d 1195, 1208 (9th Cir. 2001); see also Brown-Hunter v. Colvin, 806 F.3d 487, 493 (9th Cir.

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2015) (“General findings are insufficient; rather, the ALJ must identify what testimony is not

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credible and what evidence undermines the claimant’s complaint.”). She failed to do so, and the

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Commissioners attempt to now perform that task does not justify the ALJ’s failure to comply with

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established precedent. See Bray v. Comm’r of Soc. Sec. Admin., 554 F.3d 1219, 1225 (9th Cir.

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2009) (the ALJ’s decision is reviewed “based on the reasoning and findings offered by the ALJ—

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not post hoc rationalizations that attempt to intuit what the adjudicator may have been thinking.”);

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Slade v. Colvin, 2014 WL 580895, at *4 (E.D. Cal. Feb. 13, 2014) (“[T]he Commissioner is

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unable to salvage the ALJ’s decision with reasons that ALJ did not identify in his decision.

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Because the ALJ failed to evaluate the medical evidence in a proper manner, the Commissioner’s

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attempt to salvage the opinion cannot be substantially justified.”); Carater v. Colvin, 672 F.

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App’x 764, 765 (9th Cir. 2017) (in finding that ALJ was not substantially justified in rejecting

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medical opinions concerning plaintiff’s ability to interact with others, court declined to consider

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evidence reflecting an ability to work with others when the ALJ only discussed the evidence in
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the context of the plaintiff’s cognitive abilities); see also Williams v. Colvin, 2013 WL 4758190,

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at *4 (N.D. Cal. Sept. 4, 2013) (“The failure of the ALJ to adequately support its credibility

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findings is reason to award EAJA fees to a prevailing party.”). Accordingly, plaintiff is entitled

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to attorney’s fees under the EAJA.

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Defendant requests that any fee award be made to plaintiff. ECF No. 23 at 7-8. Astrue v.

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Ratliff, 560 U.S. 586 (2010) requires fees awarded under the EAJA to be paid directly to the

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litigant. However, courts in this district regularly order payment directly to counsel so long as

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plaintiff does not have a debt that is subject to offset and the plaintiff assigned her right to EAJA

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fees to counsel. See, e.g., Allen v. Colvin, 2014 WL 6901870 at *3 (E.D. Cal. 2014); Knyazhina

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v. Colvin, 2014 WL 5324302 at *3 (E.D. Cal. 2014); Louis v. Astrue, 2012 WL 92884 at *7 (E.D.

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Cal. 2012); Burnham v. Astrue, 2011 WL 6000265 at *2 (E.D. Cal. 2011); Calderon v. Astrue,

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2010 WL 4295583 at *8 (E.D. Cal. 2010). Here, plaintiff assigned her right to EAJA fees to her

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attorney. ECF No. 21-3. Accordingly, should plaintiff not have a debt that is subject to offset,

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the award of fees may be paid directly to counsel.

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Accordingly, it is hereby ORDERED that:

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1. Plaintiff’s motion for attorney’s fees (ECF No. 21) is granted in part;

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2. Plaintiff is awarded attorney’s fees under the EAJA in the amount of $6,034.86; and

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3. Pursuant to Astrue v. Ratliff, 560 U.S. 586 (2010), any payment shall be made payable

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to plaintiff and delivered to plaintiff’s counsel, unless plaintiff does not owe a federal debt. If the

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United States Department of the Treasury determines that plaintiff does not owe a federal debt,

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the government shall accept plaintiff’s assignment of EAJA fees and pay fees directly to

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plaintiff’s counsel.

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DATED: September 19, 2018.

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