Handwerk v. Saul
MEMORANDUM (Order to follow as separate docket entry) re 30 REPORT AND RECOMMENDATIONS re 26 MOTION for Attorney Fees (EAJA) filed by Julie A. Handwerk. Signed by Honorable Jennifer P. Wilson on 10/4/2021. (ve)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
JULIE A. HANDWERK,
ANDREW M. SAUL, Commissioner of :
Civil No. 4:19-CV-01439
Judge Jennifer P. Wilson
Magistrate Judge William I. Arbuckle
Before the court is the report and recommendation of United States
Magistrate Judge William I. Arbuckle recommending that Plaintiff’s motion for
attorney’s fees be granted. (Doc. 30.) For the reasons that follow, the court
declines to adopt the recommendation.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Neither party objected to the facts or procedural history stated in the report
and recommendation. Because the court gives “reasoned consideration” to these
uncontested portions of the report and recommendation, the court will only restate
the factual background and procedural history necessary for clarity in this opinion.
E.E.O.C. v. City of Long Branch, 866 F.3d 93, 99 (3d Cir. 2017) (quoting
Henderson v. Carlson, 812 F.2d 874, 878 (3d Cir. 1987)). Plaintiff, Julie
Handwerk, filed her original application for Social Security benefits on October
14, 2010. (Doc. 30, p. 2.) This application was denied on January 10, 2011, and
Plaintiff requested an administrative hearing on January 21, 2011. (Id.) After this
hearing, Plaintiff’s application was denied on June 28, 2012. (Id. at 3.) She
requested review before the Appeals Council of the Office of Disability
Adjudication and Review (“Appeals Council”), which was denied on September
27, 2013. (Id.)
On November 25, 2013, Plaintiff filed her first appeal with the court. (Id.)
On October 24, 2013, United States Magistrate Judge Karoline Mehalchick issued
a report and recommendation suggesting that the case should be remanded to the
Commissioner for a new administrative hearing. (Id.) This recommendation was
adopted on November 10, 2014, and the case was remanded to the Commissioner.
(Id.) A second administrative hearing was held on June 9, 2015, and a second
decision denying Plaintiff’s application for benefits was issued on February 17,
2016. (Id. at 3−4.) On March 15, 2015, Plaintiff requested review of this second
decision before the Appeals Council, which remanded Plaintiff’s case to be heard
by a new ALJ on October 7, 2016. (Id. at 4.) A third administrative hearing was
held on February 16, 2017, and the ALJ issued a decision on June 28, 2017
denying Plaintiff’s application for benefits. (Id.) On July 25, 2017, Plaintiff
requested review of this decision. (Id.) The Appeals Council remanded the case
on January 11, 2019 with instructions to “take any further action needed to
complete the administrative record and issue a new decision.” (Id.) “After
corresponding with Plaintiff’s counsel in January 2019, [the ALJ] concluded that
there was no need to conduct a fourth administrative hearing[,]” and Plaintiff’s
application for benefits was once again denied on April 24, 2019. (Id. at 5.)
On August 19, 2019, Plaintiff initiated the present action by filing a
complaint, alleging that the ALJ was not properly appointed under the Constitution
as required by Lucia v. S.E.C., 138 S. Ct. 2044 (2018).1 (Id.) Judge Arbuckle
issued a report and recommendation on April 27, 2020 suggesting that this case
should be remanded to a new, properly appointed ALJ to conduct a new
administrative hearing on Plaintiff’s 2010 Social Security case. (Doc. 23.) This
report and recommendation was adopted without objection by the undersigned on
May 29, 2020, and the case was remanded to the Commissioner. (Doc. 24.)
Thereafter, on August 6, 2020, Plaintiff filed a motion for attorney’s fees pursuant
to the Equal Access to Justice Act (“EAJA”), which is the instant motion before
the court. (Doc. 26.) On March 19, 2021, Judge Arbuckle issued a report and
recommendation in which he opined that the motion for attorney’s fees should be
granted. (Doc. 30.) The Commissioner timely filed an objection to the report and
recommendation, and Plaintiff filed a reply on the same day. (Docs. 32, 33.)
Thus, this motion is ripe for disposition.
It is undisputed that the instant appeal is the first time Plaintiff has raised the Appointments
STANDARD OF REVIEW
When a party objects to a magistrate judge’s report and recommendation, the
district court is required to conduct a de novo review of the contested portions of
the report and recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3);
Sample v. Diecks, 885 F.2d 1099, 1106 n.3 (3d Cir. 1989). The district court may
accept, reject, or modify the magistrate judge’s report and recommendation in
whole or in part. 28 U.S.C. § 636(b)(1). The district court may also receive
further evidence or recommit the matter to the magistrate judge with further
instructions. Id. “Although the standard is de novo, the extent of review is
committed to the sound discretion of the district judge, and the court may rely on
the recommendations of the magistrate judge to the extent it deems proper.”
Weidman v. Colvin, 164 F. Supp. 3d 650, 653 (M.D. Pa. 2015) (citing Rieder v.
Apfel, 115 F. Supp. 2d 496, 499 (M.D. Pa. 2000)). For the uncontested portions of
the report and recommendation, the court affords “reasoned consideration” before
adopting it as the decision of this court. City of Long Branch, 866 F.3d at 100
(quoting Henderson, 812 F.2d at 878).
A. Attorney’s Fees under the EAJA.
The EAJA provides, in pertinent part, that:
Except as otherwise specifically provided by statute, a court shall
award to a prevailing party other than the United States fees and other
expenses . . . incurred by that party in any civil action . . . including
proceedings for judicial review of agency action, brought by or against
the United States in any court having jurisdiction of that action, 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) (emphasis added).
In this case, neither party contests that Plaintiff was the prevailing party in
the underlying action. However, the parties dispute whether the Commissioner’s
position was substantially justified.
The Supreme Court has held that, in the EAJA context, the term
“substantially justified” does not mean “justified to a high degree” but instead
means “justified in substance or in the main—that is, justified to a degree that
could satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565
(1988). In other words, “an agency position is substantially justified if it has a
reasonable basis in both law and fact.” Id. (internal quotation omitted). The court
of Appeals for the Third Circuit has explained that:
[U]nder 28 U.S.C. § 2412(d)(2)(D), “the position of the United States”
includes not only the position taken in the litigation, but the agency
position that made the litigation necessary in the first place. Thus,
unless both the agency’s litigation and pre-litigation positions meet the
[legal standards prescribed by the EAJA], the government’s position is
not substantially justified.
Hanover Potato Prod., Inc. v. Shalala, 989 F.2d 123, 128 (3d Cir. 1993) (citations
omitted). The Government bears the burden of establishing that its position had a
reasonable basis in law. Id.
In addition, the Third Circuit has cautioned that “[a] court must not assume
that the government’s position was not substantially justified simply because the
government lost on the merits.” Kiareldeen v. Ashcroft, 273 F.3d 542, 554 (3d Cir.
2001). In other words, “[t]he relevant legal question is ‘not what the law now is,
but what the Government was substantially justified in believing it to have been.’”
Id. (quoting Pierce, 487 U.S. at 565, 566 n.2).
B. The Commissioner’s Pre-Litigation Position was Substantially
Judge Arbuckle’s report and recommendation found that the
Commissioner’s pre-litigation position was not substantially justified because the
Commissioner twice had the opportunity to consider whether a new hearing was
warranted before a constitutionally appointed ALJ and twice concluded that no
such hearing was necessary. (Doc. 30, pp. 14−21.) Indeed, Judge Arbuckle places
significant weight on the fact that the Appeals Council remanded Plaintiff’s Social
Security case to the ALJ after Lucia had been decided, and on the ALJ’s
subsequent decision to reach out to Plaintiff’s counsel to determine whether a new
hearing was necessary. (Id.) In Judge Arbuckle’s view, the Commissioner’s
failure to sua sponte raise the Appointments Clause issue was not “reasonable in
the main” and justified an award of attorney’s fees to Plaintiff. (Id. at 21.)
Based on the court’s review of caselaw within this Circuit, the court finds
that Judge Arbuckle’s view is an outlier, despite the distinguishing features of this
case in which the Appeals Council and the ALJ raised the issue of whether a new
hearing was warranted post-Lucia. Initially, the court notes that where, as here,
“the case turns on an unsettled or ‘close question of law,’ . . . the government
usually will be able to establish that its legal theory was ‘reasonable,’ even if it was
not ultimately accepted as legal by the courts.” Washington v. Heckler, 756 F.2d
959, 961 (3d Cir. 1985) (quoting Dougherty v. Lehman, 711 F.2d 555, 563 (3d Cir.
1983)). At the time Plaintiff’s pre-litigation administrative proceedings were
ongoing, “the question of whether a claimant must exhaust his or her
Appointments Clause challenge before obtaining judicial review remained
unsettled law.” Flynn v. Saul, No. 19-58, 2021 U.S. Dist. LEXIS 116898, at *7
(E.D. Pa. June 22, 2021).
This is because the Supreme Court held in Lucia that a new hearing should
be granted if a claimant makes a timely Appointments Clause challenge to the ALJ
presiding over the administrative proceedings. See 138 S. Ct. at 2055. However,
the Supreme Court did not define what constitutes a “timely challenge.” See id.
“After Lucia, . . . numerous courts considered cases where a Social Security
claimant was raising an Appointments Clause challenge that they had not raised
administratively, with differing results.” Marant v. Saul, No. 18-4832, 2020 U.S.
Dist. LEXIS 107680, at *12 (E.D. Pa. June 19, 2020). As explained by the Eastern
The majority of district courts throughout the country found that a
plaintiff was required to exhaust the issue, while our own district was
split in the decision on the issue. The law was not settled in this district
until the Third Circuit issued its decision in Cirko, holding that
claimants for Social Security disability benefits could make
Appointments Clause challenges “in federal court without having
exhausted those claims before the agency.” [Cirko ex rel. Cirko v.
Comm’r of Soc. Sec., 948 F.3d 148, 152 (3d Cir. 2020)].
Powell v. Saul, No. 18-4881, 2020 U.S. Dist. LEXIS 113582, at *11 (E.D. Pa. June
Thus, until January 2020 when the Third Circuit issued its decision in Cirko,
courts within and outside of this Circuit were divided on the issue of whether
plaintiffs were required to administratively exhaust Appointments Clause issues in
order to have raised a “timely challenge” to this constitutional defect as set forth in
Lucia. See Dove-Ridgeway v. Saul, No. 1:19-cv-35, 2021 U.S. Dist. LEXIS 87380,
at *9−10 (D. Del. May 7, 2021) (noting that the law regarding a claimant’s
obligation to raise an Appointments Clause challenge at the administrative level
was unsettled before Cirko); Flynn, 2021 U.S. Dist. LEXIS 116898, at *8 (noting
that “the law regarding what constitutes a timely challenge in the Social Security
context was not settled in this district” until the Third Circuit’s decision in Cirko);
Wojciechowski v. Saul, No. 18-3843, 2020 U.S. Dist. LEXIS 113595, at *10 (E.D.
Pa. June 30, 2020) (“At the pre-litigation administrative level, the issue of
exhaustion of the Appointments Clause claim was not settled law.”); Rich v.
Comm’r of the SSA, 477 F. Supp. 3d 388, 394 (E.D. Pa. 2020) (“While we expect
the Commissioner respond to a claimant’s constitutional concerns when raised and
to conform to ‘settled law’ consistent with his oath to defend the Constitution, we
do not expect nor require the Commissioner to predict how the judiciary will
interpret the Constitution in conducting administrative proceedings among varied
interpretations.”); Hoover v. Saul, 485 F. Supp. 3d 538, 542−43 (M.D. Pa. 2020)
(classifying the state of the law regarding these issues as a “shifting legal terrain”).
The Commissioner has consistently maintained that Social Security
claimants must affirmatively exhaust Appointments Clause challenges at the
administrative level before bringing such claims in federal court. (See Doc. 32.)
While “[t]he majority of district courts throughout the country found that a plaintiff
was required to exhaust the issue, . . . our own district was split in the decision on
the issue.” Wojciechowski, 2020 U.S. Dist. LEXIS 113595, at *11. Thus, in light
of the fact that “the case turns on an unsettled or ‘close question of law,’” and that
the majority of courts across the country agreed with the Commissioner, the court
finds that the Commissioner’s “legal theory was ‘reasonable,’ even [though] it was
not ultimately accepted as legal by the courts” within this Circuit. Washington,
756 F.2d at 961 (quoting Dougherty, 711 F.2d at 563).
Moreover, of the courts to have considered this issue in the Third Circuit,
those with facts similar to those presented in this case have determined that the
Commissioner, through either the Appeals Council or the presiding ALJ, was not
required to raise Appointments Clause issue sua sponte. See Dove-Ridgeway, 2021
U.S. Dist. LEXIS 87380, at *12 (holding that “the Commissioner was under no
obligation to sua sponte raise Appointments Clause challenges”); Flynn, 2021 U.S.
Dist. LEXIS 116898, at *8−9 (“Plaintiff has not cited any authority, and this Court
has found none, to support the position that the Commissioner, through either an
ALJ or the Appeals Council, must sua sponte raise an Appointments Clause
issue.”); Lenz, 2021 U.S. Dist. LEXIS 114186, at *9 (collecting cases) (“[C]ourts
in this circuit have consistently held that . . . the Commissioner did not act
unreasonably in declining to raise an Appointments Clause issue sua sponte in the
absence of the issue being raised by the claimant.”); Powell, 2020 U.S. Dist.
LEXIS 113582, at *12 (noting that there is no known authority requiring the
Commissioner to raise Appointments Clause issues on behalf of a claimant where
the claimant fails to do so); Wojciechowski, 2020 U.S. Dist. LEXIS 113595, at *12
In light of the unsettled legal landscape at the time Plaintiff’s case was
pending at the administrative level, the large number of cases within this Circuit
that have found the Commissioner’s pre-litigation position to be substantially
justified based on the unsettled nature of the law, and the equally large number of
cases that have held that there is no obligation for the Commissioner to sua sponte
raise Appointments Clause issues for claimants at the administrative level, the
court concludes that the Commissioner’s pre-litigation position was substantially
justified and declines to adopt Judge Arbuckle’s report and recommendation on
C. The Commissioner’s Litigation Position was Substantially Justified.
The court next turns to whether the Commissioner’s litigation position was
substantially justified. As explained above, the Government has the burden of
establishing that the Commissioner’s position was substantially justified. Hanover
Potato Prod., Inc., 989 F.2d at 128. The Government may do so by demonstrating
“(1) a reasonable basis in truth for the facts alleged; (2) a reasonable basis in law
for the theory it propounded; and (3) a reasonable connection between the facts
Because Judge Arbuckle concluded that the Commissioner’s pre-litigation position was not
substantially justified, he did not consider whether the Commissioner’s litigation position was
substantially justified. In order to obtain an efficient resolution of this case, the court will
consider this question.
alleged and the legal theory advanced.” Morgan v. Perry, 142 F.3d 670, 684 (3d
The facts of this case easily satisfy this first prong. It is undisputed that
Plaintiff did not raise an Appointments Clause challenge at the administrative level
before bringing an appeal in federal district court. Thus, the Commissioner can
show a “reasonable basis in truth for the facts alleged.” Id.
Second, the Commissioner had a reasonable basis in law for the theory it
propounded. The Commissioner argued that “a litigant who does not timely raise
an argument before an administrative agency forfeits that argument.” (Doc. 27,
p. 6.) In addition, the Commissioner argued that no settled law required either the
Appeals Council or the ALJ to raise the Appointments Clause issue sua sponte.
(Id. at 7−8.) The court finds that there was a reasonable basis to so argue, based on
the discussion of the unsettled caselaw appearing above which the court does not
reiterate here. See Flynn, 2021 U.S. Dist. LEXIS 116898, at *11−12 (collecting
cases). Indeed, as the District of Delaware has explained:
“Pre-Cirko . . . , particularly within the Third Circuit, there existed
sufficient variation between decisions on whether or not an
Appointments Clause challenge needed to be raised in the
administrative proceedings to render the commissioner’s position
substantially justified” constituting the type of “‘unsettled or close
question of law’ that justifies the Government’s position as based on a
reasonable theory of law.” Significantly, in Carr the Supreme Court
explicitly noted the unsettled nature of law on the issue[:]
In Lucia, the Supreme Court held that a new hearing should be
granted if one makes a “timely challenge” to the constitutionality
of the Appointment of an ALJ . . . but . . . did not define what
qualifies as a “timely challenge.” Therefore, whether the
claimant waives the Appointments Clause claim by failing to
exhaust it at the administrative level was an unsettled question at
the time the Commissioner filed his response[.]
141 S. Ct. 135 (citations omitted).
The court therefore finds the Commissioner had a reasonable basis in law for
its litigation position. Dove-Ridgeway, 2021 U.S. Dist. LEXIS 87380, at *15.
As explained above, in light of the fact that “the case turns on an unsettled or
‘close question of law,’” the court finds that the Commissioner’s “legal theory
was ‘reasonable,’ even [though] it was not ultimately accepted as legal by the
courts.” Washington, 756 F.2d at 961 (quoting Dougherty, 711 F.2d at 563).
With respect to the third and final prong, the court finds that the
Commissioner has established a reasonable connection between the facts alleged
and the legal theory advanced. See Morgan, 142 F.3d at 684. Plaintiff failed to
raise the Appointments Clause challenge at the administrative level “and no settled
law obligated the Commissioner to sua sponte raise it on her behalf.” DoveRidgeway, 2021 U.S. Dist. LEXIS 87380, at *16. Thus, there was a reasonable
connection between Plaintiff’s failure to raise the issue and the Commissioner’s
The court notes that the majority of the courts to have considered this issue
agree that the Commissioner’s litigation position was substantially justified. See
Flynn, 2021 U.S. Dist. LEXIS 116898, at *13 (collecting cases); Powell, 2020 U.S.
Dist. LEXIS 113582, at *15−16 (collecting cases); Wojciechowski, 2020 U.S. Dist.
LEXIS 113595, at *16−17; Rich, 477 F. Supp. 3d at 398. Therefore, the court
finds that the Commissioner’s litigation position was also substantially justified,
and the court will deny the motion for attorney’s fees on these additional grounds.
For the reasons stated herein, the court declines to adopt Judge Arbuckle’s
recommendation. Accordingly, the court will deny Plaintiff’s motion for
attorney’s fees. An appropriate order will issue.
s/Jennifer P. Wilson
JENNIFER P. WILSON
United States District Court Judge
Middle District of Pennsylvania
Dated: October 4, 2021
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?