Cody v. Kijakazi

48 F.4th 956

Brian J. CODY, Plaintiff-Appellant,

v.Kilolo KIJAKAZI, Acting Commissioner of Social Security, Defendant-Appellee.

No. 21-35553

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 8, 2022 Seattle, Washington

Filed September 8, 2022

Eitan Kassel Yanich (argued), Law Office of Eitan Kassel Yanich PLLC, Olympia, Washington, for Plaintiff-Appellant.

Lars J. Nelson (argued), Assistant Regional Counsel; Willy Le, Acting Regional Chief Counsel, Seattle Region X; Kerry Jane Keefe, Assistant United States Attorney; Nicholas W. Brown, United States Attorney; Office of General Counsel, Social Security Administration, Seattle, Washington; for Defendant-Appellee.

Before: Michael Daly Hawkins and Patrick J. Bumatay, Circuit Judges, and Barry Ted Moskowitz,^* District Judge.

BUMATAY, Circuit Judge:

We face the novel question of whether an administrative law judge ("ALJ") appointed in violation of the Appointments Clause can continue to decide a case after being ratified by a constitutionally authorized official. Here, a Social Security Administration ("SSA") ALJ was appointed by agency staff rather than by the Commissioner as required by the Appointments Clause. That ALJ reviewed and denied Brian Cody's disability claims. Without challenging the ALJ's appointment, Cody appealed his case to federal district court and prevailed in part. The district court vacated the ALJ decision and ordered a new hearing because the ALJ failed to properly consider certain evidence.

Cody's case then went back to the same ALJ, who by then had been properly ratified by the SSA Acting Commissioner. Unsurprisingly, the ALJ reached the same conclusion—no benefits. She addressed the evidence mandated by the district court, but still ruled against Cody. Cody again appealed to federal court, this time raising the Appointments Clause violation.

Must the second decision stand since the ALJ was properly appointed at the time? Or is Cody entitled to relief for the pre-ratification constitutional violation? Based on recent Appointments Clause precedents, we conclude the second decision was tainted by the first, and Cody must receive a new decision from a different ALJ. We thus vacate the district court decision and remand the case to the Commissioner for a hearing before a new ALJ.¹

I.

In 2014, Brian Cody applied for Social Security disability insurance and supplemental security income benefits. Cody claimed a disability based on his mental and physical limitations. After his applications were initially denied, the SSA assigned ALJ Marilyn Mauer to his case. ALJ Mauer held a hearing on Cody's matter in December 2016 and another in July 2017. In a September 2017 decision, ALJ Mauer found Cody not disabled and denied his applications for benefits. At the time of the hearings and the September 2017 decision, it is undisputed that ALJ Mauer was appointed by lower-level SSA staff and not by the SSA Commissioner.

In her decision, ALJ Mauer determined that Cody had major depressive disorder and social anxiety disorder but retained the ability to perform a full range of work with limitations. In reaching her decision, ALJ Mauer discounted Cody's testimony on his subjective symptoms as inconsistent with the overall record, and only partially relied on the opinions of several mental health professionals. For example, she gave "limited weight" to the opinions of Tasmyn Bowes, Terilee Wingate, and Kristyn Abbott. She also summarized the evidence from nurse practitioner Nancy Armstrong but did not assign a weight to it. Cody appealed the ALJ decision to the SSA Appeals Council, which denied the appeal in July 2018.

Meanwhile, in June 2018, the Supreme Court decided Lucia v. SEC , ––– U.S. ––––, 138 S. Ct. 2044, 201 L.Ed.2d 464 (2018). In that case, the Court ruled that Securities & Exchange Commission ALJs are "Officers of the United States," whose appointments must comply with the requirements of the Appointments Clause. Id. at 2049, 2051. Since the ALJ at issue ruled "without the kind of appointment the Clause requires," the Court said that Lucia was entitled to a new hearing before a different ALJ. Id. at 2055.

Weeks later, on July 16, 2018, the Acting Commissioner responded to Lucia by "preemptively" addressing any Appointments Clause questions involving Social Security claims. She ratified the appointments of all SSA ALJs and "approved those appointments as her own." 84 Fed. Reg. 9582-02, 9583 (2019). Then in March 2019, the SSA announced that, in response to timely raised Appointments Clause challenges, the Appeals Council would vacate pre-ratification ALJ decisions and assign a different, properly appointed adjudicator to conduct a fresh review of each case. See id. (explaining that the SSA will assign "an ALJ other than the ALJ who issued the decision under review").

Shortly after Lucia , back in September 2018, Cody appealed the 2017 ALJ decision to federal district court. Cody did not raise an Appointments Clause claim; he argued only that ALJ Mauer erred by discounting certain mental health evidence as well as his own testimony. The district court affirmed ALJ Mauer's weighing of the evidence from Bowes, Wingate, Abbott, and Cody himself. But it reversed on the limited ground that ALJ Mauer failed to properly address and assign a weight to the Armstrong evidence. The district court then remanded the case to the SSA for it to reconsider the Armstrong evidence, develop the record, and proceed as necessary. On remand, in June 2019, the Appeals Council vacated the 2017 decision and directed that Cody receive a new hearing before ALJ Mauer.

ALJ Mauer—now ratified by the Acting Commissioner—held a hearing in October 2019 and again ruled Cody not disabled in a December 2019 decision. This time, besides the other impairments, ALJ Mauer determined that Cody had lumbar degenerative disc disease, but remained able to perform a reduced range of light work with limitations like those in the 2017 decision. She also addressed Armstrong's opinion, giving it "no weight," and largely reiterated her earlier findings. She continued to give limited weight to the opinions of Bowes, Wingate, and Abbott, and again discounted Cody's testimony about his subjective symptoms.

In April 2020, Cody appealed the 2019 decision to federal court, raising both merits and Appointments Clause challenges. The district court affirmed the ALJ decision on all grounds. It denied the Appointments Clause claim because the 2017 decision had been vacated and ALJ Mauer was properly appointed when she issued the 2019 decision.

Cody now appeals from that ruling. We review the district court's decision de novo. Lambert v. Saul , 980 F.3d 1266, 1270 (9th Cir. 2020).

II.

A.

The Appointments Clause specifies the exclusive ways of appointing "Officers of the United States." The President "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint ... Officers of the United States." U.S. Const. art. II, § 2, cl. 2. But the Clause also provides that "the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments." Id. So as a straightforward textual matter, only the "President," "Courts of Law," or "Heads of Departments" may appoint "inferior Officers."

The Appointments Clause is a key component of the Constitution's structural design. It acts not only as a "bulwark against one branch aggrandizing its power at the expense of another branch" but also "preserves another aspect of the Constitution's structural integrity by preventing the diffusion of the appointment power." Ryder v. United States , 515 U.S. 177, 182, 115 S.Ct. 2031, 132 L.Ed.2d 136 (1995) (quoting Freytag v. Comm'r , 501 U.S. 868, 878, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991) ). It operates as a check on the legislative branch, by "prevent[ing] Congress from dispensing [the] power [to appoint] too freely." Freytag , 501 U.S. at 880, 111 S.Ct. 2631. The Clause also provides a "limiting principle" on executive appointments and so does not always "serve the Executive's interest." Id. In other words, "[t]he structural interests protected by the Appointments Clause are not those of any one branch of Government but of the entire Republic." Id.

An Appointments Clause violation is thus no mere technicality or quaint formality—it weakens our constitutional design. An appointment too far removed from the President or the head of an executive agency may, for example, erode political accountability. For it is the President who alone answers to the entire nation for his actions and for the actions of his agency heads. See Seila L. LLC v. Consumer Fin. Prot. Bureau , ––– U.S. ––––, 140 S. Ct. 2183, 2203, 207 L.Ed.2d 494 (2020) ("[T]he Framers made the President the most democratic and politically accountable official in Government."). And if the appointment power were handed-out to unelected and insulated lower-level officials, accountability would be lost in the nameless bureaucracy.

Given its importance within our Constitution's structure, the Supreme Court has established remedies with bite for Appointments Clause violations. See Lucia , 138 S. Ct. at 2055. In Lucia , the Court ruled that Securities & Exchange Commission ALJs were not mere government employees, but rather "Officers" of the United States. Id. at 2049, 2055. That's because ALJs exercise "significant discretion" in carrying out "important functions" and often serve as the "last[ ] word" for the agency. Id. at 2052–55 (simplified). As a result, their appointments must follow the Appointments Clause. And since the ALJ at issue was appointed by SEC staff rather than the SEC Commissioner, he was not properly appointed. Id. at 2051, 2055.

The Court then turned to the "relief [that] follows" from a timely raised Appointments Clause violation. Id. at 2055. In its view, "the appropriate remedy for an adjudication tainted with an appointments violation is a...