Appellate Case: 21-1033 Document: 010110674996 Date Filed: 04/25/2022 Page: 1
FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT April 25, 2022
_________________________________
Christopher M. Wolpert
Clerk of Court
DEBORAH FERN RAJO,
Plaintiff - Appellant,
v. No. 21-1033
(D.C. Nos. 1:19-CV-03010-NRN)
COMMISSIONER, SSA, (D. Colo.)
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before MORITZ, KELLY, and CARSON, Circuit Judges.
_________________________________
Deborah Fern Rajo appeals from the district court’s orders affirming the denial
of her application for disability insurance benefits (DIB) and denying her motion for
post-judgment relief under Fed. R. Civ. P. 59(e). Exercising jurisdiction under
28 U.S.C. § 1291 and 42 U.S.C. § 405(g), we vacate the district court’s judgment and
remand for further proceedings consistent with this Order and Judgment.
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
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BACKGROUND
Ms. Rajo applied for DIB in May 2014, alleging disability since August 2011
due to bipolar disorder, depression, fibromyalgia, and neck and back pain. After the
Social Security Administration (SSA) administratively denied her application,
Ms. Rajo sought review before an administrative law judge (ALJ). The ALJ held an
evidentiary hearing in May 2016 and, the following month, issued an unfavorable
decision, concluding that Ms. Rajo was not disabled. In May 2017, the SSA’s
Appeals Council denied Ms. Rajo’s request for review. She then sought review in
district court, and in December 2018, a magistrate judge, proceeding with the parties’
consent under 28 U.S.C. § 636(c)(1), reversed the ALJ’s decision. The magistrate
judge concluded that the ALJ failed to consider Ms. Rajo’s non-severe mental
impairments in determining her residual functional capacity (RFC). See generally
Wells v. Colvin, 727 F.3d 1061, 1074 (10th Cir. 2013) (noting “[s]tep four of the
sequential analysis” requires that the ALJ, among other things, “evaluate a claimant’s
physical and mental RFC” (brackets and internal quotation marks omitted)). The
magistrate judge therefore remanded the matter for further proceedings.
Following a remand from the Appeals Council, the ALJ held another
evidentiary hearing in June 2019. Two months later, he issued an unfavorable
decision, again concluding that Ms. Rajo was not disabled. The ALJ determined that
her fibromyalgia and degenerative disc disease of the lumbar and cervical spine were
severe impairments but that her other conditions, including bipolar disorder, were
nonsevere impairments. He next determined that Ms. Rajo did not qualify for
2
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presumptive disability and that she had the RFC to perform a range of medium work,
as defined in 20 C.F.R. § 404.1567(c), subject to specific limitations. The ALJ
further concluded that she was unable to perform past relevant work but was able to
perform other jobs existing in significant numbers in the national economy,
including: (1) Packager; (2) Laborer, Stores; and (3) Laundry Worker II. Ms. Rajo
did not submit written exceptions to the Appeals Council, and the Appeals Council
did not sua sponte review the claim, thus rendering the ALJ’s decision the final
agency decision. See 20 C.F.R. § 404.984(c)-(d).
Ms. Rajo then sought review in district court, and in November 2020, the
magistrate judge, again proceeding with the parties’ consent, affirmed the ALJ’s
decision. The magistrate judge first rejected Ms. Rajo’s argument that the ALJ’s
RFC determination was unsupported by substantial evidence because he failed to
properly weigh the opinions of her treating chiropractor. The magistrate judge next
rejected her claim, raised for the first time in district court, that under Lucia v. SEC,
138 S. Ct. 2044 (2018), her case was not adjudicated by a constitutionally appointed
ALJ and should be remanded for a new hearing before a different ALJ. The
magistrate judge concluded, relying on our decision in Carr v. Comm’r, SSA,
961 F.3d 1267 (10th Cir. 2020), that Ms. Rajo’s Appointments Clause claim was
waived because she did not raise, and thus exhaust, the claim in the administrative
proceedings. Ms. Rajo sought post-judgment relief under Fed. R. Civ. P. 59(e),
arguing that Carr was wrongly decided and, alternatively, that the court should stay
execution of the judgment until the Supreme Court, which had granted the petition
3
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for certiorari in Carr, ruled on the issue. The magistrate judge denied the motion,
concluding that Carr was binding and that there was no need to stay the case because
Ms. Rajo could appeal. This appeal followed.1
DISCUSSION
Ms. Rajo contends the district court erred by concluding that she waived her
Appointments Clause claim by not raising it in the administrative proceedings.
Although the district court properly applied our decision in Carr, the Supreme Court
later reversed our decision. We therefore vacate the district court’s judgment.2
In June 2018, after the ALJ’s first unfavorable decision but before the district
court reversed and remanded the matter back to the agency, the Supreme Court held
in Lucia, 138 S. Ct. at 2049, that ALJs with the Securities and Exchange Commission
(SEC) were subject to the Appointments Clause of the Constitution, U.S. Const. art.
II, § 2, cl. 2. The Court noted that “[t]he Appointments Clause prescribes the
exclusive means of appointing ‘Officers’” and that “[o]nly the President, a court of
law, or a head of department can do so.” Lucia, 138 S. Ct. at 2051. The Court
1
We granted the parties’ joint motion to stay the appeal pending a ruling by
the Supreme Court. In April 2021, the Supreme Court reversed our decision in Carr
and held that an SSA claimant is not required to administratively exhaust an
Appointments Clause claim. Carr v. Saul, 141 S. Ct. 1352, 1362 (2021). Because
the parties could not agree on the applicability of that ruling, we lifted the abatement.
2
If, on remand, the district court agrees there was an Appointments Clause
violation, the remedy is a new hearing before a different and properly appointed ALJ.
See Lucia, 138 S. Ct. at 2055. We therefore decline to address Ms. Rajo’s second
argument in this appeal: whether the magistrate judge erred in concluding that the
RFC determination was supported by substantial evidence and that the ALJ did not
improperly weigh the opinions of her treating chiropractor.
4
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concluded that SEC ALJs were “Officers of the United States” because they held a
“continuing office established by law,” exercised “significant discretion when
carrying out . . . important functions,” possessed “nearly all the tools of federal trial
judges,” and often had the last word in SEC proceedings. Id. at 2053-54 (internal
quotation marks omitted). The Court further held that “[t]he appropriate remedy for
an adjudication tainted with an appointments violation is a new hearing before a
properly appointed official,” because the judge who “heard [the] case and issued an
initial decision on the merits,” “even if he has by now received (or receives sometime
in the future) a constitutional appointment,” “cannot be expected to consider the
matter as though he had not adjudicated it before.” Id. at 2055 (internal quotation
marks omitted).
In July 2018, the Acting SSA Commissioner responded to Lucia by appointing
the SSA’s ALJs. See SSR 19-1p, 84 Fed. Reg. 9582-02, 9583 (Mar. 15, 2019). The
SSA also adopted a rule describing how it intended to “adjudicate cases pending at
the Appeals Council in which the claimant has raised a timely challenge” under
Lucia. Id. at 9582. However, the question soon arose whether an Appointments
Clause claim needed to be raised in the administrative proceedings or whether the
claim could be raised for the first time in district court.3 Our court held that an
3
In Lucia, the Court explained “that one who makes a timely challenge to the
constitutional validity of the appointment of an officer who adjudicates his case is
entitled to relief.” 138 S. Ct. at 2055 (internal quotation marks omitted). And the
Court held that Lucia, who raised the issue before the agency, “made just such a
timely challenge.” Id.
5
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Appointments Clause claim is waived if not raised in the agency proceedings,
consistent with “the general principle that an issue must have been raised before an
agency for a party to seek judicial review of agency action on that issue.” Carr,
961 F.3d at 1268, 1276 (internal quotation marks omitted). The Eighth Circuit
agreed. Davis v. Saul, 963 F.3d 790, 791 (8th Cir. 2020). But three circuits held that
Appointments Clause claims did not need to be administratively exhausted. See
Probst v. Saul, 980 F.3d 1015, 1018 (4th Cir. 2020), cert. denied, 141 S. Ct. 2633
(2021); Ramsey v. Comm’r, SSA, 973 F.3d 537, 539 (6th Cir. 2020), cert. denied,
141 S. Ct. 537 (2020); Cirko ex rel. Cirko v. Comm’r, SSA, 948 F.3d 148, 152
(3d Cir. 2020). The Supreme Court resolved the circuit split in favor of the latter
courts. Carr v. Saul, 141 S. Ct. 1352, 1356-57 (2021). The Court declined to
“impose a judicially created issue-exhaustion requirement” on Appointments Clause
claims, id. at 1358, and held that “claimants who raise those issues for the first time
in federal court are not untimely in doing so,” id. at 1362.
The sole basis for the district court’s rejection of Ms. Rajo’s Appointments
Clause claim was that she waived the claim by not exhausting it in the administrative
proceedings. But under the Supreme Court’s decision in Carr, Ms. Rajo was
permitted to raise the claim for the first time in federal court.
The Commissioner does not defend the district court’s waiver determination.
Instead, the Commissioner contends the district court’s decision should be affirmed
because Ms. Rajo’s Appointments Clause claim lacks merit. Specifically, the
Commissioner argues that the ALJ had been properly appointed prior to the 2019
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administrative proceedings and that it “is of no moment” that the ALJ heard the case
in 2016, before being properly appointed, because that ruling “was vacated” and “is
simply not before this Court.” Aplee. Br. at 29-30.4
“Although this court may affirm on any ground apparent in the record,
affirming on legal grounds not considered by the trial court is disfavored.” Rimbert
v. Eli Lilly & Co., 647 F.3d 1247, 1256 (10th Cir. 2011). This court has been
especially reluctant to affirm on alternative grounds when, as here, “we are deprived
of the benefit of vigorous adversarial testing of the issue, not to mention a reasoned
district court decision on the subject.” United States ex rel. Reed v. KeyPoint Gov’t
Sols., 923 F.3d 729, 763 n.17 (10th Cir. 2019) (internal quotation marks omitted).
We therefore remand the matter to the district court for further consideration of
Ms. Rajo’s Appointments Clause claim.5
4
The Commissioner states that the district court vacated the ALJ’s 2016
decision. See Aplee. Br. at 29. The record indicates that the district court reversed
and remanded the matter, Aplt. App. vol. 3 at 640-41, and the Appeals Council, on
remand, vacated the ALJ’s original decision, id. at 644.
5
We observe that the district courts are divided over the merits of an
Appointments Clause claim when an ALJ was appointed between an initial hearing
and decision and a subsequent hearing on remand. The Commissioner notes that two
courts found no violation under such circumstances. See Camille B. v. Kijakazi,
No. 2:20cv262, 2021 WL 4205341, at *2-3 (E.D. Va. Sept. 15, 2021); Govachini v.
Comm’r, SSA, No. 19-1433, 2020 WL 5653339, at *1 n.1 (W.D. Pa. Sept. 23, 2020);
see also Dennis L. v. Comm’r, SSA, No. C20-5170-MLP, 2020 WL 6343321, at *5
(W.D. Wash. Oct. 29, 2020), remanded sub nom. Leduc v. Kijakazi, No. 20-36117,
2021 WL 5860759, at *1 (9th Cir. Oct. 14, 2021). Several courts have concluded
otherwise, reasoning that, notwithstanding an ALJ’s appointment after the claimant’s
original hearing, the ALJ’s participation in subsequent proceedings “continued—
rather than cured—the constitutional violation attendant to the first decision.” James
R. v. Comm’r, SSA, No. C20-5632-SKV, 2021 WL 4520560, at *7 (W.D. Wash. Oct.
7
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CONCLUSION
The district court’s judgment is vacated and remanded for further proceedings
consistent with this Order and Judgment.
Entered for the Court
Nancy L. Moritz
Circuit Judge
4, 2021); accord Misty D. v. Kijakazi, No. 3:18-CV-206, 2022 WL 195066, at *3
(N.D.N.Y. Jan. 21, 2022); Cuminale v. Saul, No. 20-61004-CIV, 2021 WL 6010499,
at *3 (S.D. Fla. Oct. 15, 2021), adopted, 2021 WL 5409967 (S.D. Fla. Nov. 19,
2021); Mary D. v. Kijakazi, No. 3:20-CV-656 (RAR), 2021 WL 3910003, at *10-11
(D. Conn. Sept. 1, 2021); Welch v. Comm’r, SSA, No. 2:20-CV-1795, 2021 WL
1884062, at *3-5 (S.D. Ohio May 11, 2021), adopted, 2021 WL 2142805 (S.D. Ohio
May 26, 2021). We express no opinion on the merits of these decisions.
8