Petitioners Brief — Willie Earl Carr, et al., Petitioners v. Andrew M. Saul, Commissioner of Social Security

Supreme Court briefDec 28, 2020

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No. 20-105

In the Supreme Court of the United States

JOHN J. DAVIS, ET AL., PETITIONERS

ANDREW M. SAUL, COMMISSIONER OF SOCIAL SECURITY

THOMAS HILLIARD, PETITIONER

ANDREW M. SAUL, COMMISSIONER OF SOCIAL SECURITY

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE PETITIONERS

MAHESHA P. SUBBARAMAN

SUBBARAMAN PLLC

222 South 9th Street,

Suite 1600

Minneapolis, MN 55402

WES KAPPELMAN

KAPPELMAN LAW FIRM

P.O. Box 1792

Ames, IA 50010

KANNON K. SHANMUGAM

Counsel of Record

WILLIAM T. MARKS

JOEL S. JOHNSON

E. GARRETT WEST

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

2001 K Street, N.W.

Washington, DC 20006

(202) 223-7300

kshanmugam@paulweiss.com

SUDHIR V. RAO

ZALMAN ROTHSCHILD

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

1285 Avenue of the Americas

New York, NY 10019

QUESTION PRESENTED

Whether a claimant seeking disability benefits or supplemental security income under the Social Security Act

must exhaust an Appointments Clause challenge with the

administrative law judge whose appointment the claimant

is challenging in order to obtain judicial review of that

challenge.

(I)

PARTIES TO THE PROCEEDING

Petitioners are John J. Davis, Thomas Hilliard, Kimberly L. Iwan, and Destiny M. Thurman.

Respondent is Andrew M. Saul, Commissioner of Social Security.

(II)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 2

Constitutional provision involved ................................................ 2

Statement ...................................................................................... 2

A. Background ...................................................................... 5

B. Facts and procedural history ......................................... 8

Summary of argument ............................................................... 13

Argument..................................................................................... 17

I. A Social Security claimant need not exhaust

an Appointments Clause challenge before the

administrative law judge whose appointment

is being challenged......................................................... 17

A. Under the reasoning of Sims v. Apfel,

a Social Security claimant need not

exhaust particular issues before an

administrative law judge ........................................ 18

B. The Court should not otherwise require a

Social Security claimant to exhaust issues

before an administrative law judge ....................... 30

C. Petitioners’ Appointments Clause

challenges would be exempt from any

rule that requires a Social Security

claimant to exhaust issues before an

administrative law judge ........................................ 37

II. The Court should excuse petitioners’

failure to raise their Appointments Clause

challenges before their administrative law

judges .............................................................................. 44

Conclusion ................................................................................... 46

(III)

TABLE OF AUTHORITIES

Page

Cases:

Aragon v. Unemployment Compensation

Commission, 149 F.2d 447 (9th Cir. 1945) ................... 31

Bethesda Hospital Association v. Bowen,

485 U.S. 399 (1988) .......................................................... 38

Biestek v. Berryhill, 139 S. Ct. 1148 (2019) ....................... 25

Bowen v. City of New York, 476 U.S. 467 (1986)......... 22, 40

Califano v. Sanders, 430 U.S. 99 (1977) ....................... 37, 40

Carr v. Commissioner,

961 F.3d 1267 (10th Cir. 2020) ....................................... 29

Department of Transportation v. Public Citizen,

541 U.S. 752 (2004) .......................................................... 32

Elgin v. Department of Treasury, 567 U.S. 1 (2012) ........ 38

Free Enterprise Fund v. Public Company

Accounting Oversight Board,

561 U.S. 477 (2010) .......................................................... 37

Freytag v. Commissioner,

501 U.S. 868 (1991) .......................................... 3, 39, 44, 45

Gibson v. Berryhill, 411 U.S. 564 (1973) ............................ 37

Gutierrez de Martinez v. Lamango,

515 U.S. 417 (1995) .......................................................... 39

Hormel v. Helvering, 312 U.S. 552 (1941) ......................... 33

Island Creek Coal Co. v. Bryan,

937 F.3d 738 (6th Cir. 2019) ........................................... 31

Lexmark International, Inc. v. Static Control

Components, Inc., 572 U.S. 118 (2014) ......................... 34

Little Sisters of the Poor Saints Peter & Paul Home

v. Pennsylvania, 140 S. Ct. 2367 (2020) ....................... 34

Lucia v. SEC, 138 S. Ct. 2044 (2018) ......................... passim

Marbury v. Madison,

5 U.S. (1 Cranch) 137 (1803) ........................................... 39

Mathews v. Diaz, 426 U.S. 67 (1976) ............................ 37, 38

Mathews v. Eldridge, 424 U.S. 319 (1976) ............. 37, 38, 43

McCarthy v. Madigan, 503 U.S. 140 (1992) .......... 38, 40, 42

Page

Cases—continued:

Montana National Bank of Billings v. Yellowstone

County, 276 U.S. 499 (1928) ........................................... 38

Myers v. Bethlehem Shipbuilding Corp.,

303 U.S. 41 (1938) .............................................................. 5

NLRB v. Noel Canning, 573 U.S. 513 (2014) .................... 39

O’Leary v. OPM, 708 Fed. Appx. 669 (Fed. Cir. 2017),

cert. denied, 138 S. Ct. 2616 (2018).................................. 9

PDR Network, LLC v. Carlton & Harris

Chiropractic, Inc., 139 S. Ct. 2051 (2019) ..................... 34

Perez v. Mortgage Bankers Association,

135 S. Ct. 1199 (2015) ...................................................... 34

Reiter v. Cooper, 507 U.S. 258 (1993) ................................... 5

Richardson v. Perales, 402 U.S. 389 (1971) ....................... 39

Russello v. United States, 464 U.S. 16 (1983) ................... 23

Salinas v. Texas, 570 U.S. 178 (2013) ................................ 32

Shalala v. Illinois Council on Long Term

Care, Inc., 529 U.S. 1 (2000) ........................................... 38

Sims v. Apfel, 530 U.S. 103 (2000) ............................. passim

Singleton v. Wulff, 428 U.S. 106 (1976) ........................ 44, 45

Smith v. Berryhill, 139 S. Ct. 1765 (2019) ................ passim

Spiller v. Atchison, Topeka & Santa Fe

Railway Co., 253 U.S. 117 (1920) ............................ 31, 32

Unemployment Compensation Commission

v. Aragon, 329 U.S. 143 (1946) ........................... 31, 32, 33

United States v. L.A. Tucker Truck Lines, Inc.,

344 U.S. 33 (1952) ................................................... passim

United States v. Northern Pacific Railway Co.,

288 U.S. 490 (1933) .................................................... 31, 32

United States v. Sineneng-Smith,

140 S. Ct. 1575 (2020) ...................................................... 25

United States ex rel. Vajtauer v. Commissioner

of Immigration, 273 U.S. 103 (1927) ....................... 31, 32

Weinberger v. Salfi, 422 U.S. 749 (1975) ............................ 38

Woelke & Romero Framing, Inc. v. NLRB,

456 U.S. 645 (1982) .......................................................... 19

Page

Cases—continued:

Woodford v. Ngo, 548 U.S. 81 (2006) ...................... 30, 41, 42

Zivotofsky v. Clinton, 566 U.S. 189 (2012)......................... 39

Constitution, statutes, and regulations:

U.S. Const. Art. II, § 2, cl. 2 ....................................... passim

U.S. Const. Amend. V .......................................................... 32

Administrative Procedure Act, Pub. L. No. 79-404,

60 Stat. 237 (1946) ........................................................... 34

Social Security Act, 42 U.S.C. 301-1397mm ............. passim

Tit. II, 42 U.S.C. 401-434 .............................................. 5, 8

42 U.S.C. 405(a) ........................................................... 24

42 U.S.C. 405(b)(1) ...................................................... 39

42 U.S.C. 405(g) .................................................. passim

42 U.S.C. 405(l) ............................................................ 39

42 U.S.C. 423(d)(5)(B) ........................................... 40, 41

Tit. XVI, 42 U.S.C. 1381-1383f ................................. 5, 6, 8

42 U.S.C. 1320a-8(a) ........................................................ 23

42 U.S.C. 1320a-8(b)(2) ................................................... 23

42 U.S.C. 1320a-8(c) ........................................................ 23

42 U.S.C. 1320a-8(d)(1) ................................................... 23

5 U.S.C. 1104(a)(2).................................................................. 9

5 U.S.C. 2102(a) ...................................................................... 9

5 U.S.C. 3304(a)(1).................................................................. 9

5 U.S.C. 7123(c) .................................................................... 22

15 U.S.C. 77i(a) ..................................................................... 22

15 U.S.C. 687a(e) .................................................................. 23

15 U.S.C. 717r(b) .................................................................. 23

28 U.S.C. 1254(1) .................................................................... 2

29 U.S.C. 160(e) .............................................................. 19, 23

29 U.S.C. 210(a) .................................................................... 23

30 U.S.C. 816(a)(1)................................................................ 23

43 U.S.C. 1349(c)(5) .............................................................. 23

47 U.S.C. 405(a) .................................................................... 23

49 U.S.C. 1153(b)(4) ............................................................. 23

5 C.F.R. 930.201(b) ................................................................. 9

5 C.F.R. 930.204(a) ................................................................. 9

VII

Page

Regulations—continued:

20 C.F.R. 404.900.................................................................... 6

20 C.F.R. 404.900(a)(6) ........................................................ 39

20 C.F.R. 404.900(b) ............................................... 6, 7, 24, 25

20 C.F.R. 404.933(a) ......................................................... 7, 27

20 C.F.R. 404.938(b)(1) ........................................................ 26

20 C.F.R. 404.939...................................................... 26, 28, 29

20 C.F.R. 404.944.............................................................. 7, 26

20 C.F.R. 404.946.............................................................. 7, 26

20 C.F.R. 404.946(a) ............................................................. 26

20 C.F.R. 404.949.............................................................. 7, 26

20 C.F.R. 404.950(a) ............................................................... 7

20 C.F.R. 404.950(b) ............................................................... 7

20 C.F.R. 404.950(e) ............................................................... 8

20 C.F.R. 404.975.................................................................... 7

20 C.F.R. 404.976(c) ............................................................... 7

20 C.F.R. 404.1512(a)(1) ...................................................... 36

20 C.F.R. 404.1512(b) ........................................................... 26

20 C.F.R. 416.912(a)(1) ........................................................ 36

20 C.F.R. 416.912(b) ............................................................. 26

20 C.F.R. 416.1400.................................................................. 6

20 C.F.R. 416.1400(a)(6) ...................................................... 39

20 C.F.R. 416.1400(b) ......................................................... 6, 7

20 C.F.R. 416.1433(a) ............................................................. 7

20 C.F.R. 416.1438(b)(1) ...................................................... 26

20 C.F.R. 416.1439................................................................ 26

20 C.F.R. 416.1444............................................................ 7, 26

20 C.F.R. 416.1446............................................................ 7, 26

20 C.F.R. 416.1446(a) ........................................................... 26

20 C.F.R. 416.1449............................................................ 7, 26

20 C.F.R. 416.1450(a) ............................................................. 7

20 C.F.R. 416.1450(b) ............................................................. 7

20 C.F.R. 416.1450(e) ............................................................. 8

20 C.F.R. 416.1475.................................................................. 7

20 C.F.R. 416.1476(c) ............................................................. 7

20 C.F.R. 422.203(b) ............................................................. 26

20 C.F.R. 498.215-498.217 ................................................... 23

VIII

Page

Regulation—continued:

20 C.F.R. 498.221(f) .............................................................. 24

Miscellaneous:

Jon C. Dubin, Torquemada Meets Kafka: The

Misapplication of the Issue Exhaustion

Doctrine to Inquisitorial Administrative

Proceedings, 97 Colum. L. Rev. 1289 (1997) ....... passim

Executive Order 13,843,

83 Fed. Reg. 32,756 (July 10, 2018) ............................... 10

84 Fed. Reg. 9,583 (Mar. 15, 2019) ................... 10, 11, 28, 45

84 Fed. Reg. 40,468 (Aug. 14, 2019) ................................ 7, 27

85 Fed. Reg. 73,138 (Nov. 16, 2020) ................................ 8, 25

Office of Personnel Management, ALJs by

Agency (2017) <tinyurl.com/aljs-by-agency> ............... 9

Richard J. Pierce, Jr. & Kristin E. Hickman,

Administrative Law Treatise (6th ed. 2018) ............... 37

Social Security Administration, EM-18003:

Important Information Regarding Possible

Challenges to the Appointment of

Administrative Law Judges in SSA’s

Administrative Process (Jan. 30, 2018)......... 9, 28, 39, 40

Social Security Administration,

EM-18003 REV: Important Information

Regarding Possible Challenges to the

Appointment of Administrative Law Judges in

SSA’s Administrative Process—UPDATE

(June 25, 2018) ................................................................. 10

Social Security Administration, EM-18003 REV 2:

Important Information Regarding Possible

Challenges to the Appointment of Administrative

Law Judges in SSA’s Administrative Process—

UPDATE (Aug. 6, 2018) ................................................. 10

Social Security Administration, Form No. HA-501-U5,

Request for Hearing by Administrative Law Judge

(2015) <tinyurl.com/ssaform501> ............................ 7, 26

Page

Miscellaneous—continued:

Social Security Administration, Form No. HA-520-U5,

Request for Review of Hearing Decision/Order

(2016) <tinyurl.com/ssaform520> ...................... 7, 20, 21

Social Security Administration, Annual Data for

Appeals Council Requests for Review: Average

Processing Time (2018)

<tinyurl.com/appealscouncilprocessingtime> ............ 35

Social Security Administration, Annual Data for

Representation at Social Security Hearings

(2018) <tinyurl.com/ssarepresentation> ..................... 41

Social Security Administration, Annual Report,

Fiscal Years 2019-2021 (2020)

<tinyurl.com/ssaperformancereport> ............. 35, 36, 41

Social Security Administration,

Hearing, Appeals, and Litigation Law

Manual <tinyurl.com/ssahallex> ...................... 7, 26, 29

United States Courts, Judicial Facts

and Figures (2019)

<tinyurl.com/ssalawsuits> ............................................ 36

In the Supreme Court of the United States

No. 20-105

JOHN J. DAVIS, ET AL., PETITIONERS

ANDREW M. SAUL, COMMISSIONER OF SOCIAL SECURITY

THOMAS HILLIARD, PETITIONER

ANDREW M. SAUL, COMMISSIONER OF SOCIAL SECURITY

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE PETITIONERS

OPINIONS BELOW

The opinion of the court of appeals in Davis v. Saul

(Pet. App. 1a-9a) is reported at 963 F.3d 790. The opinion

of the court of appeals in Hilliard v. Saul (Pet. App. 10a14a) is reported at 964 F.3d 759. The opinions of the district courts (Pet. App. 15a-18a, 19a-38a, 39a-60a, 61a-82a)

are unreported. The reports and recommendations of the

magistrate judges (Pet. App. 83a-104a, 105a-131a, 132a159a) are also unreported.

(1)

JURISDICTION

The judgment of the court of appeals in Davis was entered on June 26, 2020. The judgment of the court of appeals in Hilliard was entered on July 9, 2020. The petition

for a writ of certiorari, covering the judgments in both Davis and Hilliard, was filed on July 29, 2020. The petition

was granted on November 9, 2020. The jurisdiction of this

Court rests on 28 U.S.C. 1254(1).

CONSTITUTIONAL PROVISION INVOLVED

Section 2 of Article II of the United States Constitution provides in relevant part:

[The President] shall nominate, and by and with the

Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges

of the supreme Court, and all other Officers of the

United States, whose Appointments are not herein

otherwise provided for, and which shall be established

by Law: but 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.

STATEMENT

In Sims v. Apfel, 530 U.S. 103 (2000), this Court held

that a claimant seeking disability benefits or supplemental security income under the Social Security Act

need not exhaust particular issues before the Appeals

Council of the Social Security Administration (SSA) in order to preserve those issues for judicial review. This case

presents a similar question involving issue exhaustion in

the Social Security context. The question is whether a Social Security claimant must exhaust an Appointments

Clause challenge with the Social Security ALJ whose appointment the claimant is challenging in order to obtain

judicial review of that challenge.

Petitioners are Social Security claimants whose applications for benefits were denied before this Court’s decision in Lucia v. SEC, 138 S. Ct. 2044 (2018), which held

that ALJs of the Securities and Exchange Commission

are “Officers of the United States” for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, cl. 2, and thus

cannot be appointed by agency staff. At the time, Social

Security ALJs were appointed by SSA staff without the

involvement of the Commissioner of Social Security.

While seeking judicial review of the denial of benefits by

SSA, petitioners argued that, in light of Lucia, they were

entitled to new hearings before properly appointed ALJs.

The government has not disputed that the ALJs who

heard petitioners’ claims were improperly appointed, or

that the appropriate remedy is to conduct new hearings

before properly appointed officers.

The district courts in petitioners’ respective cases held

that petitioners were barred from asserting their Appointments Clause challenges in federal court because

they had not first raised those challenges before their Social Security ALJs. The court of appeals affirmed in two

separate decisions. It reasoned that, despite the lack of a

statute or a regulation requiring issue exhaustion, imposing such a requirement protected agency authority and

promoted judicial efficiency. The court took the view that

raising an Appointments Clause challenge before a Social

Security ALJ would not have been futile, even though the

ALJ lacked the power to remedy the defect. The court

also declined to exercise its discretion to consider the unexhausted issue under Freytag v. Commissioner, 501 U.S.

868 (1991).

The decisions below were incorrect. No statute or regulation requires issue exhaustion in the context of Social

Security benefits. And Sims makes clear that judgemade rules of issue exhaustion are generally reserved for

administrative proceedings that resemble ordinary, adversarial litigation. But Social Security proceedings are

claimant-friendly and not adversarial in nature. Indeed,

there is no material difference between proceedings before a Social Security ALJ and proceedings before the Social Security Appeals Council—the type of proceeding at

issue in Sims—that would justify imposing an issue-exhaustion requirement for the former but not the latter.

Even apart from Sims, petitioners should prevail for

several additional reasons. As an initial matter, no judgemade rule of issue exhaustion in proceedings before a Social Security ALJ is warranted. The judicial practice of

imposing such rules without a basis in a statute or a regulation is highly questionable, and the government offers

no good reason why the cases permitting that practice

should be extended to this context. But even if the Court

were to impose such a rule more generally, it should not

apply the rule to preclude judicial review of petitioners’

Appointments Clause challenges, given the constitutional

nature of those challenges and the inability of Social Security ALJs to resolve them.

The court of appeals erred in rejecting petitioners’ Appointments Clause challenges for failure to raise them in

the SSA review process. The judgments below should

therefore be reversed, and the case remanded so that SSA

can provide new hearings before officers appointed in a

method prescribed by the Appointments Clause.

A. Background

1. In administrative law, the concept of “exhaustion”

refers to two related doctrines that, where applicable, require a party challenging an agency action to invoke available administrative processes before seeking judicial review. See Sims, 530 U.S. at 106-107. The doctrine of administrative exhaustion of remedies requires a party to invoke any available process for directly obtaining relief

from the agency “before proceeding to the courts.” Reiter

v. Cooper, 507 U.S. 258, 269 (1993); see, e.g., Myers v.

Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51 (1938).

The doctrine of administrative exhaustion of issues, by

contrast, requires a party to present to the agency particular objections to the challenged agency action in order to

preserve those objections for judicial review. See United

States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 3637 (1952).

Rules of administrative issue exhaustion are “largely

creatures of statute,” and it is also “common” for agencies

to impose such rules by regulation. Sims, 530 U.S. at 107,

108. On certain occasions, however, the Court has required issue exhaustion in the absence of a statute or regulation. See id. at 108-109. The “desirability” of such a

judicially created rule, the Court has explained, depends

on how closely a particular administrative proceeding resembles “normal adversarial litigation.” Id. at 109. When

an administrative proceeding is inquisitorial rather than

“adversarial” in nature, “the reasons for a court to require

issue exhaustion are much weaker.” Id. at 110.

2. The Social Security Act authorizes SSA to provide

benefits to eligible individuals under two programs. Title

II of the Act “provides old-age, survivor, and disability

benefits to insured individuals irrespective of financial

need.” Smith v. Berryhill, 139 S. Ct. 1765, 1772 (2019) (citation omitted); see 42 U.S.C. 401-434. Title XVI of the

Act “provides supplemental security income benefits to financially needy individuals who are aged, blind, or disabled regardless of their insured status.” Smith, 139 S. Ct.

at 1772 (internal quotation marks and citation omitted);

see 42 U.S.C. 1381-1383f.

The regulations governing the two programs are materially equivalent; they set out a multi-step administrative process through which claimants must generally proceed before they can obtain judicial review of a benefits

determination by SSA. See Smith, 139 S. Ct. at 1772; 42

U.S.C. 405(g). A claimant must seek an initial determination as to eligibility for benefits; seek reconsideration of

that determination; request a hearing conducted by an

ALJ; and seek review of the ALJ’s decision by the Appeals Council. See 20 C.F.R. 404.900, 416.1400.

The regulations expressly provide that, absent good

cause, a claimant who does not timely take each of the

steps in the administrative process will “lose” the “right

to judicial review.” 20 C.F.R. 404.900(b), 416.1400(b). But

neither the governing statutes nor the regulations provide

that the failure to raise any particular argument in the

administrative process will preclude a claimant from raising that argument in federal court. See Sims, 530 U.S. at

107-108.

The absence of a general issue-exhaustion requirement in Social Security proceedings is consistent with

their “informal” and “non-adversarial” nature. See 20

C.F.R. 404.900(b), 416.1400(b); Sims, 530 U.S. at 110-111

(plurality opinion). A claimant may request a hearing before an ALJ (or subsequent review by the Appeals Council) by filling out a one-page form that provides only a few

lines to set out why the claimant disagrees with the benefits determination. Neither form states that the failure to

raise a particular issue could preclude the claimant from

raising the issue in subsequent judicial review, and each

form states that it should take “about 10 minutes” for a

claimant to complete. See SSA, Form No. HA-501-U5,

Request for Hearing by Administrative Law Judge (2015)

<tinyurl.com/ssaform501>; SSA, Form No. HA-520-U5,

Request for Review of Hearing Decision/Order (2016)

<tinyurl.com/ssaform520>. A claimant may also request

a hearing through an electronic system administered by

SSA or by filing a “written request” in paper form with

the agency. See 20 C.F.R. 404.933(a), 416.1433(a); 84 Fed.

Reg. 40,468-40,469 (Aug. 14, 2019).

Consistent with the informal nature of the proceedings, a Social Security ALJ has a “duty to investigate the

facts and develop the arguments both for and against

granting benefits.” Sims, 530 U.S. at 111 (plurality opinion); see 20 C.F.R. 404.944, 416.1444. In particular, the

ALJ must “look[] fully into the issues,” 20 C.F.R. 404.944,

416.1444, which include all issues resolved against the

claimant in the decisions under review, as well as any new

issues identified by the claimant or the ALJ “on his or her

own initiative.” SSA, Hearing, Appeals, and Litigation

Law Manual § I-2-2-1 (HALLEX) <tinyurl.com/ssahallex>; see 20 C.F.R. 404.946, 416.1446. The Appeals Council’s review is “similarly broad.” Sims, 530 U.S. at 111

(plurality opinion); see 20 C.F.R. 404.900(b), 416.1400(b).

A claimant need not provide briefing or oral argument before the ALJ or Appeals Council. See 20 C.F.R. 404.949,

404.975, 404.976(c), 416.1449, 416.1475, 416.1476(c). A

claimant also need not appear before the ALJ unless the

ALJ deems it necessary. See 20 C.F.R. 404.950(a)-(b),

416.1450(a)-(b).

The Commissioner of Social Security does not act as

an opposing litigant in proceedings before the ALJ or the

Appeals Council. See Sims, 530 U.S. at 111 (plurality

opinion). When a claimant appears in person, the ALJ

“typically conducts questioning of the claimant and all witnesses,” regardless of whether the claimant is represented by counsel. Jon C. Dubin, Torquemada Meets

Kafka: The Misapplication of the Issue Exhaustion Doctrine to Inquisitorial Administrative Proceedings, 97

Colum. L. Rev. 1289, 1303 (1997); see 20 C.F.R. 404.950(e),

416.1450(e). SSA recently reaffirmed that those “informal, non-adversarial proceedings,” which are designed especially to administer federal benefits, differ significantly

from “formal, adversarial adjudications by regulatory

agencies” that do not administer such benefits. 85 Fed.

Reg. 73,139-73,140 (Nov. 16, 2020).

B. Facts And Procedural History

1. Petitioners are four individuals—John Davis, Thomas Hilliard, Kimberly Iwan, and Destiny Thurman—

who applied for Social Security benefits between 2013 and

2015. Petitioners Davis, Hilliard, and Iwan sought both

disability benefits under Title II and supplemental security income under Title XVI; petitioner Thurman sought

only supplemental security income under Title XVI. After SSA denied all four applications and then denied reconsideration, each petitioner requested and received an

ALJ hearing. An ALJ denied each application. The Appeals Council also denied review of each application between February 2017 and March 2018. Pet. App. 2a, 10a,

15a, 20a, 40a, 62a, 84a, 106a-109a, 133a-135a; Hilliard

D. Ct. Dkt. 5-2, at 1-3.

2. In January 2018, this Court granted review in Lucia to decide whether ALJs of the Securities and Exchange Commission (SEC) are “Officers of the United

States” who must be appointed consistent with the requirements of the Appointments Clause. At the time, Social Security ALJs—who constituted the vast majority of

all federal ALJs—were selected by agency staff members

with no involvement by the Commissioner. See Resp.

Cert. Br. 3; O’Leary v. OPM, 708 Fed. Appx. 669, 670

(Fed. Cir. 2017), cert. denied, 138 S. Ct. 2616 (2018); Office

of Personnel Management, ALJs by Agency (2017) <tinyurl.com/aljs-by-agency>. The selection took place

through a merit-selection process administered by the Office of Personnel Management (OPM), which classified

ALJs as “competitive service” positions—i.e., executivebranch jobs filled through “open, competitive examinations.” 5 U.S.C. 1104(a)(2), 2102(a), 3304(a)(1); see 5

C.F.R. 930.201(b). Social Security ALJs were required to

be selected either with OPM’s prior approval or from a list

of eligible candidates prepared by OPM. See 5 C.F.R.

930.204(a).

In light of the grant of review in Lucia, SSA’s Office

of the General Counsel issued an “emergency message”

later that month to ALJs, the Appeals Council, and their

staff. That message instructed ALJs to note on the record

any Appointments Clause challenges made by claimants,

but not to “discuss or make any findings related to the Appointments Clause issue,” on the ground that SSA

“lack[ed] the authority to finally decide constitutional issues such as these.” SSA, EM-18003: Important Information Regarding Possible Challenges to the Appointment of Administrative Law Judges in SSA’s Administrative Process (Jan. 30, 2018) (Davis C.A. App. 61-63). The

message further stated that the Appeals Council would

not “acknowledge, make findings related to, or otherwise

discuss” any Appointments Clause challenges. Ibid.

In June 2018, this Court issued its decision in Lucia,

holding that SEC ALJs were “Officers of the United

States” who must be appointed by the President, a court

of law, or the head of a department. See 138 S. Ct. at 2055.

Because the SEC ALJ in Lucia had been appointed by

SEC staff members, the Court ordered a “new hearing

before a properly appointed official.” Ibid. (internal quotation marks and citation omitted).

Four days after the decision in Lucia, SSA reiterated

its instruction that neither ALJs nor the Appeals Council

should address any Appointments Clause challenges

raised by claimants. See SSA, EM-18003 REV: Important Information Regarding Possible Challenges to

the Appointment of Administrative Law Judges in SSA’s

Administrative Process—UPDATE (June 25, 2018) (Davis C.A. App. 64-66). The next month, the President issued an executive order that removed all ALJs from the

competitive service. See Executive Order 13,843, 83 Fed.

Reg. 32,756 (July 10, 2018). The following week, the Acting Commissioner of Social Security “ratified” the appointment of all Social Security ALJs and Appeals Council judges and “approved those appointments as her own.”

84 Fed. Reg. 9,583 (Mar. 15, 2019).

In August 2018, SSA updated its earlier instructions

to agency staff, directing ALJs not to rule on Appointments Clause challenges to ALJ decisions issued before

the ratification date, but to deny relief for challenges to

decisions issued after that date. See SSA, EM-18003

REV 2: Important Information Regarding Possible Challenges to the Appointment of Administrative Law Judges

in SSA’s Administrative Process—UPDATE (Aug. 6,

2018) (Davis C.A. App. 67-70). SSA also advised agency

staff that, where a claimant raised a timely pre-ratification Appointments Clause challenge before the Appeals

Council, the Council would “grant review” and “issue a decision” or “order remand,” “as appropriate.” Ibid.

In March 2019, SSA published a formal policy for addressing Appointments Clause challenges to decisions

that ALJs had issued before the Acting Commissioner’s

ratification. See 84 Fed. Reg. 9,583. That policy applied

only to claimants who timely requested Appeals Council

review of ALJ decisions issued before the date of ratification some eight months earlier. See ibid. As to cases

pending before the Appeals Council in which the claimant

had raised an Appointments Clause challenge before the

ALJ, SSA ordered the Appeals Council to vacate the

ALJ’s decision and order new proceedings before a different, properly appointed ALJ (or to conduct a new rehearing itself), regardless of whether the claimant had renewed the challenge before the Appeals Council. See ibid.

SSA also ordered new proceedings as to cases in which

the claimant had failed to raise an Appointments Clause

challenge before the ALJ but did raise the challenge before the Appeals Council. See ibid.

3. Before this Court’s decision in Lucia, each petitioner filed a complaint in federal court, seeking judicial

review of SSA’s decision to deny benefits under 42 U.S.C.

405(g). Then, following Lucia, each petitioner filed a brief

to address the intervening change in law, arguing that he

or she was entitled to a new hearing before a new,

properly appointed ALJ because the presiding ALJ had

not been properly appointed. In each case, the government did not dispute that the ALJ was improperly appointed. See Davis Resp. C.A. Br. 11 n.2; Hilliard Resp.

C.A. Br. 31 n.8. Yet in each case, the district court affirmed the ALJ’s denial of benefits, expressly rejecting

the Appointments Clause challenge on the ground that it

had been forfeited because it had not been raised before

either the ALJ or the Appeals Council. See Pet. App. 4a,

17a, 37a-38a, 58a-60a, 79a-81a; Hilliard D. Ct. Dkt. 7, at

16.

4. The court of appeals affirmed in two separate judgments, holding that Social Security claimants must exhaust Appointments Clause challenges before their ALJs.

Pet. App. 1a-9a, 10a-14a.

a. In Davis, which involved petitioners Davis, Iwan,

and Thurman, the court of appeals acknowledged this

Court’s holding in Sims that Social Security claimants

need not raise issues before the Appeals Council in order

to preserve them for judicial review. See Pet. App. 5a.

But the court of appeals distinguished Sims on the ground

that it applied only to proceedings before the Appeals

Council, not before ALJs. See id. at 6a.

The court of appeals noted that the deciding vote in

Sims “turned on” the fact that, when SSA had instructed

the claimant on how to seek Appeals Council review, it had

told her that she could request review by filling out a onepage form that should take about 10 minutes to complete;

that “only failing to request Appeals Council review would

preclude judicial review”; and that the Appeals Council

“would review her entire case for issues.” Pet. App. 5a.

Having distinguished Sims in that fashion, the court of

appeals concluded that issue exhaustion was required in

proceedings before a Social Security ALJ, reasoning that

such a requirement “serves the twin purposes of protecting administrative agency authority and promoting judicial efficiency.” Id. at 6a (citation omitted).

The fact that an Appointments Clause challenge presented a constitutional question did not alter the analysis,

in the court’s view, because even “important” and “fundamental” constitutional challenges “can be forfeited.” Pet.

App. 7a (citation omitted). The court of appeals acknowledged that “a claimant need not litigate certain constitutional questions in order to satisfy the jurisdictional requirement of the judicial review statute” and that it was

“unrealistic to expect” that the Commissioner would have

“consider[ed] substantial changes in the current administrative review system at the behest of the single aid recipient raising a constitutional challenge in an adjudicatory

context.” Id. at 7a-8a (citation omitted).

The court of appeals nevertheless concluded that it did

not follow that raising the challenge before an ALJ “would

have been futile.” Pet. App. 8a. According to the court, if

the “hundreds of claimants” who could have raised Appointments Clause challenges before their ALJs had done

so, SSA would have been “alerted to the issue” and could

have “taken steps through ratification or new appointments to address [it].” Ibid.

The court of appeals also rejected petitioners’ argument that it should at a minimum exercise its discretion

to consider the unexhausted Appointments Clause challenges because they implicated the “strong interest of the

federal judiciary in maintaining the constitutional plan of

separation of powers.” Pet. App. 9a (citation omitted).

The court cited the “practicalities of potentially upsetting

numerous administrative decisions because of an alleged

appointment flaw to which the agency was not timely

alerted.” Ibid.

b. In Hilliard, the court of appeals summarily refused to consider petitioner Hilliard’s Appointments

Clause challenge, citing its decision in Davis. Pet. App.

14a.

SUMMARY OF ARGUMENT

I. A Social Security claimant need not exhaust an Appointments Clause challenge before the ALJ whose appointment the claimant is challenging in order to obtain

judicial review of that challenge.

A. Under the reasoning in Sims v. Apfel, 530 U.S. 103

(2000), a Social Security claimant is not required to raise

a particular objection to a benefits determination before

an ALJ in order to preserve the objection for judicial review. In Sims, this Court declined to require issue exhaustion in proceedings before the Social Security Ap-

peals Council. In the majority portion of the Court’s opinion, the Court explained that issue-exhaustion requirements primarily arise by statute or regulation. The Court

recognized that it had, at times, imposed judicially crafted

issue-exhaustion requirements. But the Court explained

that it had generally done so only when agency proceedings resemble normal adversarial litigation, given that issue-exhaustion rules are based on an analogy to the rules

applicable in the litigation system.

While a majority of the Court in Sims agreed with

those principles, the Court fractured with respect to the

appropriate resolution of the particular question at issue.

Writing for a four-justice plurality, Justice Thomas concluded that it would be inappropriate to require issue exhaustion before the Appeals Council because Social Security proceedings were non-adversarial. Justice O’Connor

concurred in part and concurred in the judgment, writing

separately to explain that she would resolve the case on

the ground that SSA had failed to provide notice that Social Security claimants would forfeit issues not raised before the Appeals Council.

The logic of Sims dictates that Social Security claimants need not exhaust an issue before an ALJ in order to

preserve that issue for judicial review. As in Sims, no

statute or regulation requires issue exhaustion before an

ALJ; if anything, the Social Security Act and SSA regulations affirmatively demonstrate that issue exhaustion is

not required.

Issue exhaustion would thus be required only if this

Court judicially imposed such a rule. But as the plurality

in Sims recognized, no such rule is warranted in the Social

Security context because of the non-adversarial nature of

the proceedings. And there are no material differences

between ALJ proceedings and Appeals Council proceed-

ings which would counsel in favor of requiring issue exhaustion in the former context but not the latter. The

same result would follow under Justice O’Connor’s approach, because SSA has not notified claimants that they

must exhaust issues before an ALJ in order to preserve

them for judicial review.

B. Even apart from Sims, the Court should decline to

require the exhaustion of issues before a Social Security

ALJ in order to preserve those issues for judicial review.

In United States v. L.A. Tucker Truck Lines, Inc., 344

U.S. 33 (1952), the Court stated that its prior cases established a “general rule” of issue exhaustion in administrative proceedings. But the Court has not imposed a judicially created issue-exhaustion requirement in the nearly

70 years since it decided L.A. Tucker, and the legal basis

for any such general rule is dubious. Neither L.A. Tucker

nor the cases it cited explain the source of judicial authority to create issue-exhaustion requirements not imposed

by statute or regulation. Those cases also involved unique

factual circumstances that cannot be generalized to all

agency proceedings.

Subsequent doctrinal developments have further

eroded the foundations for any general rule of issue exhaustion. Sims suggests that any such rule is limited to

agency proceedings that resemble normal adversarial litigation, and this Court’s more recent decisions call into

question the judicial practice of creating prudential rules

with no basis in statutory or regulatory text.

For all of those reasons, the Court should be wary

about relying on any general, prudential rule of issue exhaustion. But without any such rule, the policy rationales

offered by the government for requiring the exhaustion of

issues before a Social Security ALJ are far too weak to

carry the day. The government argues that the lack of

such an issue-exhaustion requirement would render

SSA’s administrative-review process “unworkable,” but

its concerns are overblown. Social Security claimants

have little incentive to conceal meritorious objections to

benefits determinations during an administrative process

that can take years to complete. In any event, it is the

duty of Congress or SSA in the first instance to address

any workability concerns that might arise.

C. Even if an issue-exhaustion requirement were generally applicable to SSA ALJ proceedings, any such requirement would not apply to petitioners’ Appointments

Clause challenges. In a number of cases, the Court has

held that parties need not exhaust constitutional claims

before administrative agencies, in part because administrative proceedings are not designed to resolve such

claims. The Court has also held that exhaustion is not required where it would be futile to raise an issue before an

agency, such as where the agency lacks the ability to provide redress.

Both of those principles apply here. The Court has

previously applied them to excuse exhaustion in a number

of cases involving Social Security proceedings. In those

cases, the Court has made clear that SSA lacks both the

competence and the ability to adjudicate constitutional

claims. That is unquestionably true with respect to petitioners’ Appointments Clause claims, as demonstrated by

SSA’s guidance to ALJs that they should state on the record that they lack the power to resolve such claims.

Nor does the government’s interest in requiring issue

exhaustion outweigh the harm to claimants from such a

requirement. Refusing to require issue exhaustion where

SSA has not itself imposed such a requirement does not

interfere with the agency’s autonomy, and it makes particularly little sense to give SSA an opportunity to correct

an Appointments Clause violation that it cannot remedy.

An issue-exhaustion requirement would also burden often-destitute claimants by inducing them to hire counsel

in SSA proceedings—which would be especially odd because it is primarily SSA’s own responsibility to raise salient issues in Social Security proceedings. For those reasons, even if the Court were to impose a general issue-exhaustion requirement for proceedings before a Social Security ALJ, petitioners should not be subject to that requirement.

II. If the Court concludes that petitioners have forfeited their Appointments Clause challenges, it should exercise its discretion to excuse the forfeiture in light of the

judiciary’s interest in enforcing the separation of powers

and the government’s decision not to dispute that petitioners’ ALJs were unconstitutionally appointed. Whether as

a matter of law or as a matter of discretion, the judgment

of the court of appeals should be reversed and the case

remanded so that SSA can provide new hearings before

constitutionally appointed ALJs.

ARGUMENT

A SOCIAL SECURITY CLAIMANT NEED NOT EXHAUST AN APPOINTMENTS CLAUSE CHALLENGE

BEFORE THE ADMINISTRATIVE LAW JUDGE

WHOSE APPOINTMENT IS BEING CHALLENGED

When a Social Security claimant believes that the ALJ

assigned to review the claim has not been appointed by a

method prescribed by the Appointments Clause, the

claimant need not raise that objection with the ALJ in order to preserve it for subsequent judicial review. That

conclusion follows ineluctably from this Court’s decision

in Sims v. Apfel, 530 U.S. 103 (2000), which declined, in

the absence of a contrary statute or regulation, to require

exhaustion of issues before the Social Security Appeals

Council.

There is no valid basis for treating proceedings before

a Social Security ALJ differently. But even if the Court

were to impose a judge-made issue-exhaustion requirement for proceedings before a Social Security ALJ more

generally, such a rule would not apply because the claims

at issue are constitutional in nature and because it would

have been futile for petitioners to raise those claims before the ALJ. The court of appeals erred in reaching a

contrary conclusion, and its judgments should now be reversed.

A. Under The Reasoning Of Sims v. Apfel, A Social Security Claimant Need Not Exhaust Particular Issues Before An Administrative Law Judge

Requiring the exhaustion of issues in proceedings before a Social Security ALJ cannot be squared with this

Court’s decision in Sims.

1. The question presented in Sims was whether a Social Security claimant must raise a particular ground for

challenging an ALJ’s benefits determination before the

Social Security Appeals Council in order to preserve that

issue for judicial review. While no single opinion commanded a majority in its entirety, the Court held that issue exhaustion was not required.

a. Justice Thomas delivered the Court’s judgment

and wrote for a majority in the portion of his opinion setting forth the basic framework governing administrative

issue exhaustion. See 530 U.S. at 106-110. In that portion

of the opinion, the Court first rejected the proposition that

“an issue-exhaustion requirement” is a “corollary” of any

requirement of exhaustion of remedies. Id. at 107. Instead, the Court viewed the two requirements as not “necessarily” connected, and it reasoned that any such “corollary” was “particularly unwarranted” in the context of

proceedings before the Social Security Appeals Council.

Ibid.

“Requirements of administrative issue exhaustion,”

the Court explained, are “largely creatures of statute”—

a fact “reflect[ed]” in the Court’s case law. 530 U.S. at

107-108. The Court cited as an example its decision in

Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645

(1982), which applied a statute providing that “[n]o objection that has not been urged” before the National Labor

Relations Board “shall be considered by the court.” Id. at

665 (quoting 29 U.S.C. 160(e) (1982)). But in the case before it, the Court noted, no statute “require[d] issue exhaustion in the request for review” filed by a claimant with

the Social Security Appeals Council. Sims, 530 U.S. at

108.

The Court also recognized that it is “common” for an

agency to require issue exhaustion by regulation. 530

U.S. at 108. When such a regulation is valid, the Court

continued, “courts reviewing agency action regularly ensure against the bypassing of that requirement by refusing to consider unexhausted issues.” Ibid. But the Court

noted that SSA’s regulations did not require issue exhaustion (even though it was “likely” that the Commissioner of

Social Security could promulgate such a requirement if he

so chose). See ibid.

The Court acknowledged that it had sometimes “imposed” an issue-exhaustion requirement in the absence of

a statute or regulation. See 530 U.S. at 108. But “[t]he

basis for a judicially imposed issue-exhaustion requirement,” the Court explained, was “an analogy to the rule

that appellate courts will not consider arguments not

raised before trial courts.” Id. at 108-109. Accordingly,

the “desirability” of imposing a judicially created issueexhaustion requirement “depends on the degree to which

the analogy to normal adversarial litigation applies in a

particular administrative proceeding.” Id. at 109. Such a

rule can be appropriate in “adversarial administrative

proceeding[s]” in which the “parties are expected to develop the issues.” Id. at 110. But when proceedings are

not adversarial, the Court observed, “the reasons for a

court to require issue exhaustion are much weaker.” Ibid.

b. While a majority of the Court agreed on the foregoing principles, the Court fractured on the precise analysis necessary to resolve the case. See Sims, 530 U.S. at

110-111 (plurality opinion); id. at 113 (O’Connor, J., concurring in part and concurring in the judgment).

i. Writing for a four-justice plurality, Justice

Thomas concluded that it would be inappropriate to require issue exhaustion before the Appeals Council because “Social Security proceedings are inquisitorial rather than adversarial.” 530 U.S. at 110-111. For example,

the plurality noted, it is “the ALJ’s duty to investigate the

facts and develop the arguments both for and against

granting benefits,” and the Commissioner does not “oppose[] claimants” during the review process. Id. at 111

(citing Jon C. Dubin, Torquemada Meets Kafka: The Misapplication of the Issue Exhaustion Doctrine to Inquisitorial Administrative Proceedings, 97 Colum. L. Rev.

1289, 1301-1305, 1325-1329 (1997) (Dubin)).

The plurality found support for its view in SSA’s regulations. Those regulations provide that SSA “conduct[s]

the administrative review process in an informal, nonadversarial manner” and that the Appeals Council will “evaluate the entire record” on its own, including parts of the

ALJ’s decision with which the claimant may agree. 530

U.S. at 111 (citation omitted). The plurality noted that a

claimant was not even required to file a brief with the Appeals Council; instead, the claimant needed only to fill out

SSA Form HA-520, which “provides only three lines for

the request for review” and states that it “will take only

10 minutes” to complete. Id. at 111, 112. Accordingly, the

plurality explained, the Appeals Council “does not depend

much, if at all, on claimants to identify issues for review”—a fact the plurality found “entirely understandable” given that a “large portion” of claimants “either have

no representation at all or are represented by non-attorneys.” Ibid. (citing Dubin 1294 n.29).

For those reasons, the plurality determined that the

analogy to adversarial proceedings is “weakest” in the

context of Social Security proceedings. 530 U.S. at 112.

The plurality thus concluded that “a judicially created issue-exhaustion requirement is inappropriate.” Ibid.

ii. Justice O’Connor concurred in part and concurred

in the judgment. She agreed with the plurality that the

question whether to require issue exhaustion in the absence of a statute or regulation “requires careful examination of the characteristics of the particular administrative procedure provided.” 530 U.S. at 113 (internal quotation marks and citation omitted). She further explained

that “[t]he Court’s opinion provides such an examination,

and reaches the correct result.” Ibid.

According to Justice O’Connor, however, SSA’s “failure to notify claimants of an issue exhaustion requirement” before the Appeals Council provided a “sufficient

basis” for the Court’s judgment. 530 U.S. at 113. Justice

O’Connor noted that SSA regulations did not state that a

claimant must “raise specific issues before the Appeals

Council to preserve them for review in federal court”; to

the contrary, the limited nature of Form HA-520 suggested that issue exhaustion was not required. Ibid. She

also observed that SSA’s regulations conveyed that the

Appeals Council would review the ALJ’s decision in full.

Id. at 114.

In Justice O’Connor’s view, the agency had thus told

claimants “(1) that [they] could request review by sending

a letter or filling out a 1-page form that should take 10

minutes to complete, (2) only that failing to request Appeals Council review would preclude judicial review, and

(3) that the Appeals Council would review [the] entire case

for issues.” 530 U.S. at 114. Because the claimant before

the Court had done “everything that the agency asked of

her,” Justice O’Connor refused to “impose any additional

requirements.” Ibid.

2. The reasoning endorsed by a majority of the Court

in Sims compels the conclusion that Social Security claimants are not required to exhaust issues before Social Security ALJs in order to preserve them for judicial review.

a. To begin with, as in Sims, no statutory provision

requires the exhaustion of an objection to an SSA benefits

determination before an ALJ. See Davis Resp. C.A. Br.

11-22. And the language and context of the judicial-review

provision of the Social Security Act, 42 U.S.C. 405(g), affirmatively indicates that Congress did not intend to impose such a requirement.

Section 405(g) provides that “any individual, after any

final decision of the Commissioner of Social Security

made after a hearing to which he was a party, * * * may

obtain a review of such decision.” Nothing in that language suggests an intent to require administrative issue

exhaustion. And while exhaustion of administrative remedies is required in Social Security proceedings, that obligation is grounded in the requirement in Section 405(g)

that a decision be “final” before judicial review is authorized. See Sims, 530 U.S. at 107-108; Bowen v. City of New

York, 476 U.S. 467, 482 (1986).

Congress’s omission of any express issue-exhaustion

requirement in Section 405(g) is telling, because Congress

has often included issue-exhaustion provisions in corresponding statutes permitting judicial review of agency action. See, e.g., 5 U.S.C. 7123(c) (Federal Labor Relations

Authority); 15 U.S.C. 77i(a) (Securities and Exchange

Commission); 15 U.S.C. 687a(e) (Small Business Administration); 15 U.S.C. 717r(b) (Federal Energy Regulatory

Commission); 29 U.S.C. 210(a) (Department of Labor); 29

U.S.C. 160(e) (National Labor Relations Authority); 30

U.S.C. 816(a)(1) (Federal Mine Safety and Health Review

Commission); 43 U.S.C. 1349(c)(5) (Department of the Interior); 47 U.S.C. 405(a) (Federal Communications Commission); 49 U.S.C. 1153(b)(4) (National Transportation

Safety Board).

In addition, Congress has expressly required issue exhaustion in a separate statute administered by SSA. The

Commissioner of Social Security may administratively

impose civil penalties on any person who engages in certain wrongful conduct involving Social Security benefits.

See 42 U.S.C. 1320a-8(a), (c). A party “adversely affected” by the Commissioner’s imposition of civil penalties

may seek judicial review, but “[n]o objection” that the

party did not “urge[] before the Commissioner of Social

Security” may be “considered by the court” absent “extraordinary circumstances.” 42 U.S.C. 1320a-8(d)(1). Notably, those civil-penalties proceedings are adversarial in

nature, with the charged party having the right to written

notice of the charge and an opportunity for a hearing on

the record, at which the party may be represented by

counsel and may present and cross-examine witnesses.

See 42 U.S.C. 1320a-8(b)(2); see also 20 C.F.R. 498.215498.217.

Section 405 not only lacks that sort of express issueexhaustion language; it includes other rules limiting judicial review of benefits determinations, suggesting that the

omission of an issue-exhaustion requirement was not accidental. See Russello v. United States, 464 U.S. 16, 23

(1983). For example, the statute authorizes the Commissioner to promulgate rules regulating the “method of tak-

ing and furnishing” the “proofs and evidence” in administrative proceedings. 42 U.S.C. 405(a). And when SSA denies a claim because of a claimant’s failure to “submit

proof in conformity with” such regulations, the statute

provides that a court “shall review only the question of

conformity with such regulations and the validity of such

regulations.” 42 U.S.C. 405(g). The critical point is that,

while Section 405(g) includes some limits on judicial review of an SSA determination, it does not preclude review

of an unexhausted issue.

b. Also as in Sims, no regulation requires exhaustion

of a particular objection to an Social Security ALJ’s benefits determination before a claimant may seek judicial review of that objection. Instead, the relevant regulations

again merely require exhaustion of remedies, stating that

a claimant will “lose [the] right to judicial review” of a benefits determination if the claimant does not “take the next

step” in the administrative process “within the stated time

period.” 20 C.F.R. 404.900(b). By contrast, SSA regulations governing proceedings to impose civil penalties provide that a party will forfeit an argument in an administrative appeal of an ALJ’s decision by failing to raise the

argument before the ALJ. See 20 C.F.R. 498.221(f).

c. Because no statute or regulation requires the exhaustion of particular objections to an SSA benefits determination before an ALJ, the only remaining question is

whether the Court should impose such a requirement on

its own. But the analysis approved by a majority of the

Court in Sims compels the conclusion that issue exhaustion is not required in Social Security proceedings,

whether before the Appeals Council or before an ALJ.

As already noted, see pp. 18-20, the majority in Sims

explained that “[t]he basis for a judicially imposed issueexhaustion requirement is an analogy to the rule that ap-

pellate courts will not consider arguments not raised before trial courts.” 530 U.S. at 108-109. The “desirability”

of imposing an issue-exhaustion requirement thus “depends on the degree to which the analogy * * * applies

in a particular administrative proceeding.” Id. at 109.

“The differences between courts and agencies are nowhere more pronounced than in Social Security proceedings.” Sims, 530 U.S. at 110 (plurality opinion). In ordinary litigation, the parties “frame the issues for decision”

and “advance[e] the facts and argument[s] entitling them

to relief,” and the courts perform the “role of neutral arbiter[s].” United States v. Sineneng-Smith, 140 S. Ct.

1575, 1579 (2020) (citations omitted). But unlike judicial

proceedings, Social Security proceedings are “inquisitorial,” Sims, 530 U.S. at 110-111 (plurality opinion)—indeed, by regulation, they are “informal” and “non-adversarial.” 20 C.F.R. 404.900(b); see Biestek v. Berryhill, 139

S. Ct. 1148, 1152 (2019). And SSA itself recognizes that

its proceedings have “significant differences” from the

“formal, adversarial adjudications” administered by other

“regulatory agencies.” 85 Fed. Reg. 73,139 (Nov. 16,

2020); see id. at 73,140, 73,141, 73,142 (similar).

d. To be sure, the Court in Sims noted that the question “[w]hether a claimant must exhaust issues before [an]

ALJ” is “not before us.” 530 U.S. at 107. But the ALJ

process is the same as the Appeals Council process in

every relevant respect. In fact, the plurality in Sims relied on the nature of proceedings before ALJs in order to

demonstrate the non-adversarial nature of Social Security

proceedings more generally. See id. at 111.

A Social Security ALJ wears “three hats”: the ALJ

“help[s] the claimant develop facts and evidence; help[s]

the government investigate the claim; and issue[s] an independent decision.” 85 Fed. Reg. 73,140; see Dubin

1303-1304. The ALJ thus has the initial “duty” to “ensure

that the administrative record is fully and fairly developed.” SSA, Hearings, Appeals, and Litigation Law Manual § I-2-6-56 (HALLEX) <tinyurl.com/ssahallex>; see

20 C.F.R. 404.1512(b), 416.912(b). And as with the Appeals Council, the ALJ also “has primary responsibility

for identifying and developing the issues” to be decided at

the hearing. Sims, 530 U.S. at 112 (plurality opinion); see

20 C.F.R. 404.938(b)(1), 404.946, 416.1438(b)(1), 416.1446.

While the issues before the ALJ generally include all

issues “brought out” in the prior determinations that were

resolved against the claimant, the ALJ may also raise issues that have not “previously been adjudicated” on “his

or her own initiative.” HALLEX § I-2-2-1; see 20 C.F.R.

404.946(a), 416.1446(a). The ALJ must notify the claimant

of the issues to be decided at the hearing; a claimant who

“objects to an issue[] the ALJ will decide” should notify

the ALJ in writing. HALLEX § I-2-2-20; see 20 C.F.R.

404.939, 416.1439.

After identifying the relevant issues, the ALJ must

“look[] fully” into them, 20 C.F.R. 404.944, 416.1444, “investigat[ing] the facts and develop[ing] the arguments

both for and against granting benefits,” Sims, 530 U.S. at

111 (plurality opinion). And at the hearing, “[t]he Commissioner has no representative before the ALJ to oppose

the claim for benefits.” Ibid.

Proceedings before a Social Security ALJ share the

same features of Appeals Council proceedings that the

plurality in Sims found salient. See 530 U.S. at 111. In

both contexts, the claimant need not submit briefs or oral

argument. See 20 C.F.R. 404.949, 416.1449. Indeed, a

claimant pursuing either proceeding need only fill out a

one-page form that states that it should take 10 minutes

to complete. See 20 C.F.R. 422.203(b); SSA, Form No.

HA-501, supra. The plurality in Sims found the similar

version of the form for Appeals Council review to be

“strong[]” evidence that “the [Appeals] Council does not

depend much, if at all, on claimants to identify issues for

review.” 530 U.S. at 112. The same inference follows with

regard to ALJs—especially because a claimant can also

request ALJ review through an even more informal electronic or written submission. See 20 C.F.R. 404.933(a); 84

Fed. Reg. 40,468-40,469 (Aug. 14, 2019).

All told, application of the legal framework for the judicial creation of issue-exhaustion rules adopted by the

majority in Sims makes easy work of this case. Under

that framework, proceedings before a Social Security

ALJ are non-adversarial, and so “the reasons for a court

to require issue exhaustion” are “weak[].” Sims, 530 U.S.

at 110. The Court should thus decline to impose such a

requirement here.

3. Although the framework adopted by the majority

in Sims is more than sufficient to resolve this case in petitioners’ favor, the outcome would remain the same under

the approach taken by Justice O’Connor in her separate

opinion. As was the case in the context of Appeals Council

proceedings, SSA has also “fail[ed] to notify claimants of

an issue exhaustion requirement” in proceedings before

ALJs. Sims, 530 U.S. at 113 (opinion concurring in part

and concurring in the judgment).

a. In Justice O’Connor’s view, SSA had failed to provide the requisite notice of an issue-exhaustion requirement before the Appeals Council because it had told

claimants “(1) that [they] could request review by sending

a letter or filling out a 1-page form that should take 10

minutes to complete, (2) only that failing to request Appeals Council review would preclude judicial review, and

(3) that the Appeals Council would review [the] entire case

for issues.” Sims, 530 U.S. at 114. Once again, the same

is true with respect to proceedings before a Social Secu-

rity ALJ. As already explained, the agency has told claimants that they need only fill out a similar form to request

review; SSA regulations state only that failing entirely to

seek ALJ review would preclude judicial review; and the

regulations make the ALJ responsible for reviewing the

case for issues to be resolved at the hearing. See pp. 6-8,

25-27, supra. Even under Justice O’Connor’s approach,

therefore, the exhaustion of issues before a Social Security ALJ is not required.

That is particularly true of the Appointments Clause

challenges at issue here. After the grant of review in Lucia v. SEC, 138 S. Ct. 2044 (2018), SSA directed ALJs not

to decide Lucia-based Appointments Clause challenges

on the ground that the agency “lack[ed] the authority” to

decide those issues, and it instructed the Appeals Council

to ignore such challenges entirely. SSA, EM-18003: Important Information Regarding Possible Challenges to

the Appointment of Administrative Law Judges in SSA’s

Administrative Process (Jan. 30, 2018) (Davis C.A. App.

61-63). Only in March 2019 did the agency explain to

claimants that it would provide new hearings to parties

that had raised the challenges before either the ALJ or

the Appeals Council. See 84 Fed. Reg. 9,583; pp. 10-11,

supra. But at that point, it was far too late for petitioners

to raise the issue, since SSA had finally denied their

claims a year or more earlier.

b. In its brief at the certiorari stage, the government

argued that Justice O’Connor’s approach would not preclude the judicial creation of an issue-exhaustion requirement at the ALJ stage, because “the regulations governing ALJ proceedings do not ‘affirmatively suggest that

specific issues need not be raised.’ ” Resp. Cert. Br. 11

(quoting Sims, 530 U.S. at 113 (O’Connor, J., concurring

in part and concurring in the judgment)). In particular,

the government cited 20 C.F.R. 404.939, which states that,

if a claimant “object[s] to the issues to be decided at the

hearing,” the claimant “must notify the administrative law

judge in writing at the earliest possible opportunity.”

That regulation was on the books in substantially the

same form when the Court decided Sims, see 20 C.F.R.

404.939 (2000), yet the Court concluded that “nothing” in

the regulations imposed an issue-exhaustion requirement.

530 U.S. at 107. And ironically, the government did not

invoke that regulation below as a basis for imposing an issue-exhaustion requirement. See Davis Resp. C.A. Br.

11-22; Hilliard Resp. C.A. Br. 30-41; see also Carr v. Commissioner, 961 F.3d 1267, 1270 (10th Cir. 2020) (same).

In any event, the government gets it the wrong way

around. The determining factor in Justice O’Connor’s

analysis was that SSA “fail[ed] to notify claimants of an

issue exhaustion requirement”; it was not that the agency

had affirmatively notified claimants that there was no

such requirement. Sims, 530 U.S. at 113 (opinion concurring in part and concurring in the judgment). And nothing

in the regulation the government cites gives affirmative

notice that, by failing to object to the list of issues identified by the ALJ, a claimant will forfeit the right to judicial

review of that issue. Indeed, a claimant need only object

to “an issue[] the ALJ will decide”—that is, an issue expressly listed in the “advance notice” sent to the claimant

of the issues the ALJ will decide at the hearing. HALLEX § I-2-2-20 (emphasis added). Because no statute or

regulation (or other agency document) notifies claimants

that they are required to preserve issues by raising them

before their ALJs, Justice O’Connor’s approach in Sims

would not permit the judicial creation of an issue-exhaustion requirement for ALJ proceedings.

A straightforward application of Sims resolves this

case. No statute or regulation requires issue exhaustion

in proceedings before a Social Security ALJ, and Social

Security proceedings are non-adversarial in nature. In

fact, proceedings before a Social Security ALJ are materially indistinguishable from those before the Appeals

Council—the precise context in which the Court refused

to require issue exhaustion in Sims. Applying the reasoning of Sims here, the Court should hold that a party need

not exhaust a particular objection to a benefits determination before a Social Security ALJ in order to preserve

that objection for judicial review.

B. The Court Should Not Otherwise Require A Social Security Claimant To Exhaust Issues Before An Administrative Law Judge

If the Court were to conclude that Sims alone does not

resolve this case, it still should decline to require the exhaustion of issues before a Social Security ALJ. The basis

for the judicial creation of such requirements is questionable, and the arguments for doing so in proceedings before a Social Security ALJ are invalid.

1. In United States v. L.A. Tucker Truck Lines, Inc.,

344 U.S. 33 (1952), the Court divined from its prior cases

a “general rule” that “courts should not topple over administrative decisions unless the administrative body not

only has erred but has erred against objection made at the

time appropriate under its practice.” Id. at 37. Yet the

Court has not recognized a judicially created issue-exhaustion rule in the nearly 70 years since L.A. Tucker.1

While the Court did favorably cite the relevant portion of L.A.

Tucker in Woodford v. Ngo, 548 U.S. 81 (2006), that case involved an

express statutory requirement to exhaust administrative remedies.

See id. at 87-88, 90.

Because the legal basis for that long-dormant practice is

dubious, the Court should not revive it here.

a. In L.A. Tucker, the Court cited four cases to support its statement that exhaustion of issues before administrative agencies was generally required: Spiller v.

Atchison, Topeka & Santa Fe Railway Co., 253 U.S. 117

(1920); United States ex rel. Vajtauer v. Commissioner of

Immigration, 273 U.S. 103 (1927); United States v. Northern Pacific Railway Co., 288 U.S. 490 (1933); and Unemployment Compensation Commission v. Aragon, 329

U.S. 143 (1946). See 433 U.S. at 36 n.5. But those cases

do not support the existence of a general issue-exhaustion

requirement for several reasons.

First, none of those cases explained the source of a

court’s power to create an issue-exhaustion requirement

in the absence of a statute or regulation imposing such a

requirement. See Spiller, 253 U.S. at 130; Vajtauer, 273

U.S. at 113; Northern Pacific, 288 U.S. at 494; Aragon,

329 U.S. at 155. Indeed, this Court “has yet to identify the

source of the judiciary’s authority to impose” a judgemade issue-exhaustion requirement “on top of a statutory

scheme that does not expressly contain one.” Island

Creek Coal Co. v. Bryan, 937 F.3d 738, 747 (6th Cir. 2019).

Second, those cases involved unique facts that are not

generalizable to all issues and all agency proceedings.

Each of the administrative proceedings in those cases was

adversarial in nature. See Spiller, 253 U.S. at 122-123;

Vajtauer, 273 U.S. at 106-111; Northern Pacific, 288 U.S.

at 492; Aragon v. Unemployment Compensation Commission, 149 F.2d 447, 450-452 (9th Cir. 1945). And three

of the cases involved “evidentiary or testimonial objections” that a party did not raise during the “evidentiary

development stages” of the proceedings. Dubin 1342; see

Spiller, 253 U.S. at 130; Vajtauer, 273 U.S. at 113; North-

ern Pacific, 288 U.S. at 494. The final case, Aragon, involved the unusual circumstance of a court of appeals “inject[ing]” an issue into the case that the parties had not

raised before either the relevant administrative agency or

the district court. See 329 U.S. at 155.

Third, the holdings in those cases are best understood

not to rest on any general rule of issue exhaustion at all.

The decisions in Spiller and Northern Pacific are explained by the applicable standard of review: an agency

does not act “arbitrarily” by basing its order in part on

unobjected-to hearsay evidence that was “substantially

corroborated” by other “clearly admissible” evidence,

Spiller, 253 U.S. at 131, nor does an agency commit an

“abuse of discretion” by denying a motion for rehearing

that sought to introduce evidence available “months” before the agency acted, Northern Pacific, 288 U.S. at 494.2

The decision in Vajtauer rested on the longstanding principle that a witness who “desires the protection” of the

Fifth Amendment privilege against self-incrimination

“must claim it” at the “time he relies on it.” Salinas v.

Texas, 570 U.S. 178, 183 (2013) (citing, inter alia, Vajtauer, 273 U.S. at 113). And in Aragon, as just explained,

the error lay with the court of appeals, which decided an

issue never raised by the parties. See 329 U.S. at 155; see

also Sims, 530 U.S. at 109 (noting that the “waived issue”

in Aragon had not been “raised before the [d]istrict

[c]ourt”).

Fourth, to the extent any general rule of issue exhaustion did exist before L.A. Tucker, the Court applied it in-

Cf. Department of Transportation v. Public Citizen, 541 U.S. 752,

764-765 (2004) (holding that an agency’s “fail[ure] adequately to discuss potential alternatives” to a final rule was neither arbitrary nor

capricious when those alternatives were not presented to the agency

in the rulemaking process).

consistently. In Aragon, the Court invoked issue exhaustion but then proceeded to reject the unpreserved argument on the merits. See 329 U.S. at 155. And in Hormel

v. Helvering, 312 U.S. 552 (1941), the Court chose to consider the applicability to a taxpayer of a particular statute

that the Commissioner of Internal Revenue had not

raised before the Board of Tax Appeals. See id. at 554557. The Court noted that its tax cases requiring issue

exhaustion had been “careful to point out the circumstances justifying application” of an issue-exhaustion requirement “in the particular case,” and that requiring issue exhaustion in that case would provide the taxpayer

with a windfall. Id. at 557, 559-560.

b. Whatever the original basis for the “general rule”

of issue exhaustion divined in L.A. Tucker, its foundations

have eroded over time.

As an initial matter, the majority in Sims declined to

apply any “general rule” of issue exhaustion, explaining

that issue exhaustion was least appropriate when the particular administrative proceedings were “inquisitorial” in

nature and were most appropriate when the proceedings

resembled “normal adversarial litigation.” 530 U.S. at

109-110. L.A. Tucker itself fits comfortably within that

framework: the administrative proceeding at issue there

was adversarial in nature, as were the proceedings in the

cases on which L.A. Tucker relied. See id. at 110; L.A.

Tucker, 344 U.S. at 36; pp. 31-32, supra. For the reasons

discussed above, no issue-exhaustion requirement should

apply in Social Security proceedings because, unlike the

proceedings in those cases, they are non-adversarial. See

pp. 24-27, supra.

The imposition of judicially created issue-exhaustion

requirements, moreover, is in tension with modern principles of statutory interpretation. As a general matter,

courts no longer allow “policy-laden arguments” to overcome “the text of [a] statute.” PDR Network, LLC v.

Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051, 2066

(2019) (Kavanaugh, J., concurring); see Little Sisters of

the Poor Saints Peter & Paul Home v. Pennsylvania, 140

S. Ct. 2367, 2381 (2020). A court will therefore not apply

its “independent policy judgment to recognize a cause of

action that Congress has denied,” nor will it “limit a cause

of action that Congress has created merely because ‘prudence’ dictates.” Lexmark International, Inc. v. Static

Control Components, Inc., 572 U.S. 118, 128 (2014). In

related fashion, a court will not craft a “judge-made procedural right” that Congress did not establish in the Administrative Procedure Act, because “imposing such an

obligation is the responsibility of Congress or the administrative agencies, not the courts.” Perez v. Mortgage

Bankers Association, 135 S. Ct. 1199, 1207 (2015).

To be sure, the foregoing principles did not arise in the

specific context of issue-exhaustion requirements. But

they do suggest that care is warranted when the government seeks to impose a prudential issue-exhaustion requirement not rooted in the text of the relevant statute or

the regulations implementing it. That is especially true

here: as the Court recently recognized, the unique facets

of the Social Security regime suggest that Congress

“wanted more oversight by the courts in this context rather than less,” given that it “designed” that regime to be

“unusually protective” of claimants. Smith, 139 S. Ct. at

1776 (citation omitted).

2. In light of the lack of support for any purported

“general rule” of administrative issue exhaustion, the

Court should be wary of relying on any such rule in deciding whether issue exhaustion is required in proceedings

before a Social Security ALJ. Aside from that purported

general rule, however, the government has offered only

weak policy arguments in support of an issue-exhaustion

requirement.

The government contends (Resp. Cert. Br. 9) that

SSA’s administrative-review process would be “unworkable” without an issue-exhaustion requirement. That contention is unfounded. As an initial matter, Social Security

claimants have little reason to “sandbag[]” the agency by

withholding a potentially dispositive issue until the claimant’s case reaches federal court. See ibid. After all, SSA’s

regulations ordinarily require a Social Security claimant

to proceed through a multi-step administrative process

before seeking judicial review. See Smith, 139 S. Ct. at

1772; p. 6, supra.

Because that process can take years to complete, a

claimant dissatisfied with an initial benefits determination

has every incentive to raise any potentially dispositive issue at the earliest possible juncture. See SSA, Annual

Performance Report, Fiscal Years 2019-2021, at 45-47

(2020) <tinyurl.com/ssaperformancereport> (SSA Performance Report); SSA, Annual Data for Appeals Council Requests for Review: Average Processing Time (2018)

<tinyurl.com/appealscouncilprocessingtime>. In addition, both the ALJ and the Appeals Council have the responsibility to raise any salient issues during the review

process, see pp. 25-27, supra, making it unlikely that unexhausted but meritorious issues will reach federal court

in significant numbers.

Indeed, in many Social Security cases, the absence of

an issue-exhaustion requirement may not affect the

agency at all. When a claim for benefits turns on fact-intensive questions regarding the claimant’s disability, the

primary issue will often be whether SSA’s decision is supported by substantial evidence. See 42 U.S.C. 405(g). An

issue-exhaustion requirement would have little effect in

those cases, as the claimant is ordinarily precluded from

submitting “new evidence” to the court which was not previously submitted in accordance with SSA’s rules. Ibid.;

see, e.g., 20 C.F.R. 404.1512(a)(1), 416.912(a)(1).

The government notes that SSA “completes over

760,000 ALJ hearings” each year. Resp. Cert. Br. 9 (citing SSA Performance Report 4, 44, 46). But only a tiny

fraction of those cases ever reach federal court. United

States Courts, Judicial Facts and Figures, tbl 4.4, at 3

(2019) <tinyurl.com/ssalawsuits> (noting that fewer than

18,000 Social Security cases were filed in the preceding

year). It is hard to believe that, of that small fraction, the

even smaller fraction of claimants with meritorious arguments not raised until federal court will swamp the system.

In any event, even if the lack of an issue-exhaustion

requirement in proceedings before a Social Security ALJ

were to present a genuine workability concern, the responsibility for addressing that problem would lie in the

first instance with Congress and SSA. Congress has

shown that it knows how to require issue exhaustion by

statute, see pp. 22-23, supra, and SSA has declined to require issue exhaustion in the 20 years since the Court

noted in Sims that SSA could do just that. See 530 U.S.

at 108.

While the government argues that an issue-exhaustion

requirement would “protect[] the authority of the administrative agency,” Resp. Cert. Br. 9, that has it exactly

backwards: to impose a judicially created exhaustion rule

would override both Congress’s and SSA’s decisions not

to impose such a requirement in the aftermath of Sims.

To the extent the Court concludes that Sims does not already foreclose such a requirement, it should therefore

decline to impose an issue-exhaustion requirement on

proceedings before a Social Security ALJ.

C. Petitioners’ Appointments Clause Challenges Would

Be Exempt From Any Rule That Requires A Social Security Claimant To Exhaust Issues Before An Administrative Law Judge

Even if an issue-exhaustion requirement were generally applicable to Social Security ALJ proceedings, any

such requirement would not apply to petitioners’ Appointments Clause challenges. The ALJ lacked the power to

decide constitutional issues of that sort, and petitioners’

interest in having their claims decided plainly outweighs

the government’s interest in requiring exhaustion.

1. Appointments Clause challenges to the appointment of Social Security ALJs are not subject to administrative exhaustion requirements.

a. In a “long line of cases,” this Court has held that a

party generally need not ask an administrative agency to

resolve a constitutional challenge to the agency’s “decisionmaking process” in order to preserve such a challenge

for judicial review. 2 Richard J. Pierce, Jr. & Kristin E.

Hickman, Administrative Law Treatise § 17.5, at 1519

(6th ed. 2018); see Sims, 530 U.S. at 115 (Breyer, J., dissenting). Accordingly, where a party has “exhausted the

full set of available administrative review procedures,”

the “failure to have raised his constitutional claim” with

the agency “would not bar him from asserting it later in a

district court.” Mathews v. Eldridge, 424 U.S. 319, 329

n.10 (1976); see, e.g., Mathews v. Diaz, 426 U.S. 67, 76

(1976); Gibson v. Berryhill, 411 U.S. 564, 574-575 (1973).

As the Court has explained, “[c]onstitutional questions

obviously are unsuited to resolution in administrative

hearing procedures,” and “access to the courts” is “essential” to their resolution. Califano v. Sanders, 430 U.S. 99,

109 (1977); see Free Enterprise Fund v. Public Company

Accounting Oversight Board, 561 U.S. 477, 491 (2010).

In a related and equally long line of cases, the Court

has held that litigants need not exhaust administrative

remedies where doing so would be “futile.” See Shalala

v. Illinois Council on Long Term Care, Inc., 529 U.S. 1,

13 (2000). For example, exhaustion will be excused where

an agency is “unable to consider whether to grant relief

because it lacks institutional competence to resolve the

particular type of issue presented, such as the constitutionality of a statute.” McCarthy v. Madigan, 503 U.S.

140, 147-148 (1992); see, e.g., Diaz, 426 U.S. at 76. Exhaustion is also excused where the agency “lack[s] authority to grant the type of relief requested.” Madigan, 503

U.S. at 148; see, e.g., Bethesda Hospital Association v.

Bowen, 485 U.S. 399, 404 & n.2 (1988); Montana National

Bank of Billings v. Yellowstone County, 276 U.S. 499, 505

(1928). The futility principle comports with the commonsense notion that it would be pointless to require “claims

to be filed initially” with an agency that “can do nothing

but pass them along unaddressed.” Elgin v. Department

of Treasury, 567 U.S. 1, 24 (2012) (Alito, J., dissenting).

b. The Court has applied the foregoing principles to

hold that claimants who have applied for Social Security

benefits need not exhaust constitutional challenges to

SSA’s administrative procedures by first presenting those

challenges to SSA, explaining that SSA lacks both the “jurisdiction” and the “competence” to decide such claims.

See Diaz, 426 U.S. at 76 (citation omitted); Weinberger v.

Salfi, 422 U.S. 749, 765 (1975); Eldridge, 424 U.S. at 329

n.10; see also Smith, 139 S. Ct. at 1774 n.7.

The Court should reach the same conclusion as to petitioners’ claims that the ALJs who presided over their

Social Security hearings were not properly appointed. An

Appointments Clause challenge is a “structural constitutional objection[],” and the judiciary has a particularly

“strong interest” in “maintaining the constitutional plan

of separation of powers.” Freytag v. Commissioner, 501

U.S. 868, 878-879 (1991) (citation omitted). After all, it is

the “duty of the judicial department”—and not of administrative agencies—to resolve disputes implicating the

structural protections of the Constitution. NLRB v. Noel

Canning, 573 U.S. 513, 525 (2014) (quoting Marbury v.

Madison, 5 U.S. (1 Cranch) 137, 177 (1803)); see, e.g., Zivotofsky v. Clinton, 566 U.S. 189, 196-197 (2012).

It would be especially bizarre to require a claimant to

raise an Appointments Clause challenge before the improperly appointed official. Such a challenge attacks the

ALJ’s authority to decide the matter at all, see Lucia, 138

S. Ct. at 2055-2056, and the challenge would thus make

the ALJ “a judge in his own cause,” Gutierrez de Martinez v. Lamagno, 515 U.S. 417, 428 (1995) (citation omitted). An Appointments Clause challenge thus differs even

from a challenge to the constitutionality of the agency’s

procedures; in the latter case, the ALJ might not only

have some relevant expertise about the agency’s own procedures but might also be capable of resolving the claimant’s concern by resting the decision on another ground

or by conducting the hearing differently. Cf. Richardson

v. Perales, 402 U.S. 389, 402 (1971).

Raising an Appointments Clause challenge before a

Social Security ALJ would also be futile: a Social Security

ALJ is authorized to determine only whether a claimant

is entitled to benefits under the Social Security Act “on

the basis of evidence adduced at [a] hearing.” 42 U.S.C.

405(b)(1); see 42 U.S.C. 405(l); 20 C.F.R. 404.900(a)(6),

416.1400(a)(6). To its credit, SSA has recognized as much,

instructing ALJs not to “discuss or make any findings related to the Appointments Clause issue” precisely because

“SSA lacks the authority to finally decide constitutional

issues such as these.” SSA, EM-18003: Important Infor-

mation Regarding Possible Challenges to the Appointment of Administrative Law Judges in SSA’s Administrative Process (Jan. 30, 2018) (Davis C.A. App. 62). Even if

issue exhaustion were generally required in proceedings

before a Social Security ALJ, therefore, no exhaustion requirement would apply to petitioners’ Appointments

Clause challenges.3

2. In addition, the purposes for an exhaustion requirement would not be served by requiring claimants to

raise their Appointments Clause challenges before Social

Security ALJs. When determining whether to require exhaustion, the Court has balanced “the interest of the individual in retaining prompt access to a federal judicial forum” against “countervailing institutional interests favoring exhaustion.” Madigan, 503 U.S. at 146. In this case,

petitioners’ interests are weighty, and the government’s

countervailing interests are not.

On the one hand, imposing an issue-exhaustion requirement on Social Security claimants such as petitioners would cause “undue prejudice.” Madigan, 503 U.S. at

146. Because Social Security claimants are subject to an

inquisitorial review process, it is “[t]he [agency], not the

claimant, [that] has primary responsibility for identifying

and developing the issues.” Sims, 530 U.S. at 112 (plurality opinion); see pp. 25-26, supra. The ALJ takes an “active investigatory role” and “shoulders a statutory obligation” to obtain evidence. Dubin 1303; see 42 U.S.C.

Nor is a hearing before an ALJ an “ironclad prerequisite” for judicial review of a Social Security benefits determinations. Smith, 139

S. Ct. at 1774. The Court has exercised jurisdiction over both constitutional and non-constitutional claims asserted by Social Security

claimants despite the lack of a prior hearing before SSA. See id. at

1774 n.7; City of New York, 476 U.S. at 482-484; Sanders, 430 U.S. at

109.

423(d)(5)(B). The ALJ must sometimes also order medical testing and request witnesses. See Dubin 1303. Requiring issue exhaustion would compel claimants, who are

otherwise not required to develop facts or make legal arguments, see id. at 1302-1304, to identify constitutional

claims or else risk forfeiting them.

Such a requirement would be especially burdensome

for claimants who lack legal representation at their administrative hearings. In 2015 (the most recent year for

which data are available), about 30% of claimants lacked

attorney representation in SSA hearings. See SSA, Annual Data for Representation at Social Security Hearings (2018) <tinyurl.com/ssarepresentation>. And that

year alone, more than 2.7 million individuals applied for

disability benefits. See SSA Performance Report 44. In

light of claimants’ limited resources and the issues at

stake, Congress designed the SSA administrative process

to be “unusually protective” of claimants. Smith, 139

S. Ct. at 1776 (citation omitted). It does not make sense

to require often-destitute claimants to retain counsel to

write briefs advancing constitutional arguments that SSA

lacks the power to resolve.

On the other hand, the government’s interests are

much less compelling. Exhaustion ordinarily serves two

primary governmental purposes. First, exhaustion protects “administrative agency authority” by giving an

agency “an opportunity to correct its own mistakes with

respect to the programs it administers before it is haled

into federal court,” thereby also discouraging “disregard

of the agency’s procedures.” Woodford v. Ngo, 548 U.S.

81, 89 (2006) (internal quotation marks, alteration, and citation omitted). Second, exhaustion promotes efficiency

because claims “can be resolved much more quickly and

economically in proceedings before an agency than in liti-

gation in federal court.” Ibid. Likewise, “where a controversy survives administrative review, exhaustion of the

administrative procedure may produce a useful record for

subsequent judicial consideration.” Madigan, 503 U.S. at

145.

Neither of those interests is implicated here. As to administrative autonomy: petitioners do not allege a “mistake” that the agency could “correct,” but rather a constitutional defect that the adjudicator lacked the power to

remedy. See pp. 38-40, supra. And petitioners are not

“disregard[ing]” an agency procedure, because there is no

regulation requiring them to raise their constitutional arguments before an ALJ. See p. 24, supra. To the contrary, petitioners dutifully exhausted their administrative

remedies—just as SSA’s regulations require. The real

threat to SSA’s autonomy is a judicially created rule of issue exhaustion that neither Congress nor SSA has seen

fit to impose. See p. 36, supra.

As to administrative efficiency: it would be inefficient

to ensure that SSA has an opportunity to correct an error

it lacks the power to address. Indeed, requiring issue exhaustion would force claimants to expend resources on futile briefing. Nor would requiring exhaustion help create

a “useful record for subsequent judicial consideration.”

Ngo, 548 U.S. at 89 (citation omitted). The facts relevant

to the ALJ’s determination—namely, those relating to the

claimant’s disability—are entirely irrelevant to the constitutionality of the ALJ’s appointment.

3. The court of appeals erred by failing to recognize

that petitioners’ Appointments Clause challenges were

exempt from any issue-exhaustion requirement that may

attach to proceedings before a Social Security ALJ.

The court of appeals acknowledged that it was “unrealistic to expect” the Commissioner of Social Security to

have “consider[ed] substantial changes” in the “administrative review system” if petitioners had raised their Appointments Clause challenges before their ALJs. Pet.

App. 7a-8a (quoting Eldridge, 424 U.S. at 330). The court

nevertheless reasoned that, if “hundreds of claimants”

had raised such challenges, SSA would have been “alerted

to the issue” and “could have taken steps through ratification or new appointments to address [it].” Pet. App. 8a.

Yet SSA was “alerted to the issue” by no later than January 2018, when it instructed its ALJs to state on the record that they lacked the power to resolve any Appointments Clause challenges. See pp. 9-11, supra. And it was

not until over a year later that the agency announced a

formal policy to provide new hearings to claimants who

raised Appointments Clause challenges. See ibid. It is

hard to believe that SSA would have cured the constitutional violations if claimants had only flagged the issue before their ALJs.

The court of appeals also overstated the government’s

interest in issue exhaustion. The court reasoned that, under petitioners’ theory, “hundreds if not thousands of social security claimants” could require SSA to rehear their

cases, Pet. App. 8a; the government, for its part, has indicated that the figure is only in the “hundreds,” see Resp.

Cert. Br. 12. Either way, an agency that conducts over

760,000 ALJ hearings in a year is unlikely to be seriously

burdened by the limited set of claimants in the pipeline

with valid yet unexhausted Lucia-based Appointments

Clause challenges. Indeed, in light of the modest additional burden here, one might well wonder why the government is litigating this issue rather than simply giving

new hearings to petitioners and other similarly situated

claimants.

II. THE COURT SHOULD EXCUSE PETITIONERS’ FAILURE TO RAISE THEIR APPOINTMENTS CLAUSE

CHALLENGES BEFORE THEIR ADMINISTRATIVE

LAW JUDGES

After all of that, if the Court nevertheless were to conclude that petitioners were required to exhaust their Appointments Clause claims by raising them before their Social Security ALJs, it should “exercise [its] discretion” to

excuse petitioners’ failure to do so. Freytag, 501 U.S. at

879.

As a general matter, an appellate court has discretion

to “resolv[e] an issue not passed on below,” including

where “the proper resolution is beyond any doubt” or

where “injustice might otherwise result.” Singleton v.

Wulff, 428 U.S. 106, 121 (1976) (citations omitted). In

Freytag, the Court permitted a party to raise an Appointments Clause challenge before a special trial judge of the

Tax Court even though the party had consented to proceedings before that very judge. See 501 U.S. at 877-879

(citation omitted). The Court reasoned that the Appointments Clause argument was neither “frivolous” nor “disingenuous”; that the argument went to the “validity” of

the underlying proceeding that was the “basis for th[e] litigation”; and that the judiciary had a “strong interest” in

“maintaining the constitutional plan of separation of powers.” Id. at 879 (citation omitted).

Those principles counsel in favor of excusing petitioners’ failure to raise their Appointments Clause challenges

before the Social Security ALJs whose appointments they

were challenging. Freytag involved the same type of constitutional challenge, and this case thus implicates the

same “strong interest of the federal judiciary” in enforcing the separation of powers. 501 U.S. at 879. And as in

Freytag, the “alleged defect” in the appointment of the

Social Security ALJs goes to the “validity of the [administrative] proceeding that is the basis for th[e] litigation”—namely, the ALJs’ decision to deny petitioners’

claims for Social Security benefits. Ibid.

The “proper resolution” of the Appointments Clause

challenge here is also “beyond any doubt.” Singleton, 428

U.S. at 121. The government has not disputed that Social

Security ALJs are “Officers of the United States” for constitutional purposes, U.S. Const. Art. II, § 2, cl. 2, and the

government has conceded that petitioners’ ALJs were not

appointed in a method prescribed by the Appointments

Clause. See Resp. Cert. Br. 3; Davis Resp. C.A. Br. 11

n.2; Hilliard Resp. C.A. Br. 31 n.8. In fact, SSA has already decided to afford new hearings to claimants with

pending cases as a remedy for the Appointments Clause

violations in their cases. See 84 Fed. Reg. 9,583; pp. 1011, supra.

It would be inequitable for the Court to decline to excuse petitioners’ failure to raise their Appointments

Clause challenges before their Social Security ALJs. Petitioners were deprived of their entitlement to an ALJ appointed according to the requirements of the Appointments Clause. And if the Court refused to consider the

petitioners’ challenge here, then petitioners would be

treated differently from those claimants who, by happenstance, still had claims pending before SSA when Lucia

was decided. Under SSA’s policy, claimants who failed to

raise their Appointments Clause challenges before their

ALJs, but whose cases were still pending before the Appeals Council at the time of the policy, were entitled to

new proceedings upon request. See 84 Fed. Reg. 9,583.

It would be profoundly unjust to impose an ALJ exhaustion requirement on petitioners when SSA did not

even see fit to enforce that requirement against other

claimants in cases still pending before it when Lucia was

decided. If the Court were to conclude that issue exhaustion is required at all in this context, therefore, it should

at a minimum exercise its discretion to allow petitioners

to obtain relief on their plainly meritorious Appointments

Clause claims.

CONCLUSION

The judgments of the court of appeals should be reversed, and the case remanded for further proceedings.

Respectfully submitted.

MAHESHA P. SUBBARAMAN

SUBBARAMAN PLLC

222 South 9th Street,

Suite 1600

Minneapolis, MN 55402

WES KAPPELMAN

KAPPELMAN LAW FIRM

P.O. Box 1792

Ames, IA 50010

KANNON K. SHANMUGAM

WILLIAM T. MARKS

JOEL S. JOHNSON

E. GARRETT WEST

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

2001 K Street, N.W.

Washington, DC 20006

(202) 223-7300

kshanmugam@paulweiss.com

SUDHIR V. RAO

ZALMAN ROTHSCHILD

PAUL, WEISS, RIFKIND,

WHARTON & GARRISON LLP

1285 Avenue of the Americas

New York, NY 10019

DECEMBER 2020

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.