John J. Davis, Plaintiff - Appellant, v. Andrew Saul, Commissioner, Social Security Administration, Defendant - Appellee. Destiny M. Thurman, Plaintiff - Appellant, v. Andrew Saul, Commissioner, Social Security Administration, Defendant - Appellee. Kimberly L. Iwan, Plaintiff - Appellant, v. Andrew Saul, Commissioner, Social Security Administration, Defendant - Appellee.
No. 18-3422, No. 18-3451, No. 18-3452
United States Court of Appeals For the Eighth Circuit
June 26, 2020
Appeals from United States District Court for the Northern District of Iowa - Cedar Rapids. Submitted: November 13, 2019. Filed: June 26, 2020.
Before COLLOTON, WOLLMAN, and BENTON, Circuit Judges.
Appellants John Davis, Destiny Thurman, and Kimberly Iwan applied unsuccessfully for social security benefits in 2013 or 2014. Each brought an action in the district court, asserting that the administrative law judge who denied the application for benefits was not properly appointed in accordance with the Appointments Clause of the Constitution.
I.
The three claimants applied for disability insurance benefits and supplemental security
All three claimants sought review of the agency‘s dеcision in the district court under
As of 2017, administrative law judges in the Social Security Administration were not apрointed by the head of the agency, but rather by lower-level officials. While Lucia was pending at the Court, the SSA issued several emergency measures. On January 30, 2018, the agency‘s Office of General Counsel warned ALJs that they might receive Appointments Clause challenges and instructed them not to “discuss or make any findings related to the Appointments Clause issue,” because the “SSA lacks the authority to finally decide constitutional issues such as these.” The agency directed the ALJs to aсknowledge when the issue had been raised. Soc. Sec. Admin., EM-18003: Important Information Regarding Possible Challenges to the Appointment of Administrative Law Judges in SSA‘s Administrative Process (2018).
On June 25, shortly after the Court decided Lucia, the SSA‘s Office of Hearing Operations issued a revised emergency measure. This direction continued to instruct ALJs to acknowledge, but not to address, challenges based on the Appointments Clause. Soc. Sec. Admin., EM-18003 REV: Important Information Regarding Possible Challenges to the Appointment of Administrative Law Judges in SSA‘s Administrative Prоcess - UPDATE (2018).
Finally, on August 6, the Office of Hearing Operations issued another revised version of the same emergency measure. This one announced that (i) the agency‘s Acting Commissioner recently had ratified the appointment of all ALJs, thereby curing any defect related to the Appointments Clause, and (ii) ALJs should continue to acknowledge and report any Appointments Clause challenges that were raised before the ratification date. Soc. Sec. Admin., EM-18003 REV 2: Important Information Regarding Possible Challenges to the Appointment of Administrative Law Judges in SSA‘s Administrative Process - UPDATE (2018).
In their complaints, Davis, Thurman, and Iwan did not raise a challenge to the appointment of the ALJ who decided their cases. A magistrate judgе, considering only the issues raised by each claimant, recommended that the district court affirm the agency‘s decision denying each application for benefits. In August 2018, each claimant moved for leave to file a supplemental brief that would raise an Appointments Clause challenge for the first time. The district court allowed briefing, but declined to consider the new argument. Citing Anderson v. Barnhart, 344 F.3d 809, 814 (8th Cir. 2003), the court ruled in each case that because the claimant did not raise an Appointments Clause challenge before the ALJ or Appeals Council,
II.
The claimants sought review of the agency‘s decisions in federal court under
Even where a district court has jurisdiction under the statute, however, this court also has required a claimant to exhaust a particular issue before an administrative law judge in order to seek judicial review on that issue. Anderson, 344 F.3d at 814. The agency‘s regulations similarly require a claimant to notify an ALJ before the hearing if the claimant objects to the issues to be decided.
In Sims v. Apfel, 530 U.S. 103 (2000), the Supreme Court held that a claimant who was denied benefits by an administrative law judge was not required to exhaust an issue before the Appeals Council in order to seek judicial review. Althоugh the Court said that the reasons for requiring exhaustion are much weaker in a non-adversarial proceeding than in an adversarial proceeding, id. at 109-10, the case ultimately was decided on narrower grounds. The deciding vote turned on the fact that the agency told the claimant that she could seek review by sending a letter or filling out a one-page form that should take ten minutes, that only failing to request Appeals Council review would preclude judicial review, and thаt the Appeals Council would review her entire case for issues. Id. at 113-14 (O‘Connor, J., concurring in part and concurring in the judgment).
Foreshadowing Sims, this court held in Harwood v. Apfel, 186 F.3d 1039 (8th Cir. 1999), that a claimant did not forfeit an issue by failing to raise it before the
Appeals Council. Id. at 1042-43. The Sims plurality favorably cited Harwood. 530 U.S. at 112 (plurality opinion). But this court in Harwood also acknowledged that failure to raise an issuе before either the ALJ or the Appeals Council “perhaps present[s] a stronger case for a waiver rule.” 186 F.3d 1043 n.3. Other pre-Sims cases from this court appeared to require exhaustion of issues before an ALJ. Pena v. Chater, 76 F.3d 906, 909 (8th Cir. 1996); Brockman v. Sullivan, 987 F.2d 1344, 1348 (8th Cir. 1993). Whether a claimant must exhaust issues before an ALJ was not before the Court in Sims, 530 U.S. at 107, and our post-Sims decision in Anderson expressly required that step. 344 F.3d at 814; see also Forte v. Barnhart, 377 F.3d 892, 896 (8th Cir. 2004).
The issue exhaustion requirement is consistent with longstanding principles of administrative law. “Ordinarily an appellate court does not give consideration to issues not raised below.” Hormel v. Helvering, 312 U.S. 552, 556 (1941). “[O]rderly procedure and good administration require that objections to the proceedings of an administrative agency be made while it has opportunity for correction.” United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952). “Exhaustion
The claimants advance three interrelated arguments for excusing their failure tо raise an Appointments Clause challenge during agency proceedings. They maintain that constitutional claims need not be exhausted, that exhaustion of this particular constitutional challenge would have been futile, and that thе court should
exercise its discretion to waive any applicable exhaustion requirement. This court has largely rejected those contentions in litigation arising from another agency. Presented with a constitutional challenge tо appointments of members of the National Labor Relations Board, we held that a company waived its claim by failing to raise the issue before the Board: “Constitutional considerations, no matter how important or ‘fundamental,’ сan be forfeited as Justice Scalia has emphasized: ‘Appointments Clause claims, and other structural constitutional claims, have no special entitlement to review.‘” NLRB v. RELCO Locomotives, Inc., 734 F.3d 764, 798 (8th Cir. 2013) (quoting Freytag v. Comm‘r, 501 U.S. 868, 893 (1991) (Scalia, J., concurring in part and concurring in the judgment)).
In the social security context, the Supreme Court has explained that a claimant need not litigate certain constitutional questions in order to satisfy the jurisdictional requirement of the judicial review statute. Eldridge, 424 U.S. at 329 n.10; see Califano v. Sanders, 430 U.S. 99, 109 (1977). And we may accept that “[i]t is unrеalistic to expect that the [Commissioner] would consider substantial changes in the current administrative review system at the behest of the single aid recipient raising a constitutional challenge in an adjudicatory context.” Eldridge, 424 U.S. at 330.
But those obsеrvations do not demonstrate that exhaustion would have been futile here. Application of the exhaustion doctrine is supposed to be “intensely practical.” Bowen, 476 U.S. at 484 (quoting Eldridge, 424 U.S. at 331 n.11) (internal quotation omitted). As a practical matter, the clаimants here maintain that hundreds if not thousands of social security claimants may raise for the first time in federal court a challenge to the manner in which administrative law judges were appointed. The practical effect of sustaining that position would be to require the agency to rehear a multitude of cases. Yet if hundreds of claimants had raised an Appointments Clause challenge before the agency, the Commissioner would have been in a position to avoid an administrative quagmire. “Repetition of [an] objection ... might lead to
a change of policy, or, if it did not, the [agency] would at least be put on notice of the accumulating risk of wholesale reversals being incurred by its persistence.” L.A. Tucker Truck Lines, 344 U.S. at 37. Even if an individual ALJ was powerless to address the constitutionality of her appointment, the agency head—alerted to the issue by claimants in the adjudicatory process—could have taken
For similar reasons, we do not believe this is “one of those rare cases in which we should exercise our discretion” to consider a non-exhausted claim. Freytag, 501 U.S. at 879. Freytag resolved a constitutionаl challenge to the appointment of Special Trial Judges of the United States Tax Court. The Court noted that although the petitioner did not raise the issue before the Tax Court, the claim implicated “the strong interest of the federal judiciary in maintaining the constitutional plan of separation of powers.” Id. (quoting Glidden Co. v. Zdanok, 370 U.S. 530, 536 (1962)). This court, however, has not understood Freytag to mean that all Appointments Clause challenges are exempt from the typical requirements of issue exhaustion. RELCO Locomotives, 734 F.3d at 798. We consider here the praсticalities of potentially upsetting numerous administrative decisions because of an alleged appointment flaw to which the agency was not timely alerted. We also recognize the perverse incentives that could bе created by allowing claimants to litigate benefits before an ALJ without objection and then, if unsuccessful, to secure a remand for a second chance based on an unexhausted argument about how the ALJ was appointed. Sеe Freytag, 501 U.S. at 895 (Scalia, J., concurring in part and concurring in the judgment). Under all of the circumstances, we do not view this as a rare situation in which a federal court should consider an issue that was not presented to the agency.
The judgments of the district court are affirmed.