Unpublished Disposition, 928 F.2d 1136 (9th Cir. 1990)

MEMORANDUM^** 

Roy L. Eheler, plaintiff in the proceedings below, appeals the district court's order denying him attorney's fees and expenses under the Equal Access to Justice Act, 28 U.S.C. § 2412(d) ("EAJA"). Eheler prevailed in his claims for disability benefits and supplemental security income after an ALJ's initial denial of benefits was reversed and remanded by the district court. The district court subsequently denied Eheler's request for attorney's fees. We reverse the district court's order denying fees and remand for determination of appropriate fees.

Eheler, a 33-year old man, applied for supplemental security income and disability insurance benefits under Titles II and XVI of the Social Security Act on the basis of borderline mental retardation, mixed personality disorder, and low back syndrome. The results of all intelligence quotient tests in the record place Eheler's I.Q. at between 73 and 80, and therefore at the lower end of the borderline range of intellectual functioning. Psychological evaluations indicate that Eheler is capable of understanding and following simple instructions, but not capable of dealing with more complex instructions. Although Eheler has been taking a number of adult education classes, he is still functionally illiterate. The psychologists' reports in the record also diagnose Eheler as having a mixed personality disorder marked by impulsivity and suspiciousness that make it difficult for Eheler to deal with others. Finally, Eheler has acute and chronic thoracic and lumbosacral strain.

Eheler worked as a dishwasher in a restaurant for about three years after completing high school in a special education program. In 1979, Eheler fell at the restaurant and was hospitalized for back injuries. His medical records reflect continuing complaints of back pain dating from this point. He returned to his dishwashing job after a three-month period of incapacitation. He was terminated from the job some time in 1981.

Later in 1981, a rehabilitative services organization placed Eheler in a job as a janitor at the Salvation Army. During his employment there, he had difficulty performing routine tasks. Eheler was fired in May of 1985, apparently because his performance was not deemed adequate and because of personality problems with his supervisor.

In October, 1986, again through vocational rehabilitation assistance, Eheler obtained part-time employment as a printer's assistant. At the end of the six-month trial period his supervisor stated that he would not hire Eheler on a permanent basis because he had to be given direction continuously, often was unable to understand simple, oral, instructions, and was not reliable. Subsequently, after seeking a job for six months, Eheler applied for disability benefits.

Following a hearing, an administrative law judge ("ALJ") found that while claimant's back pain would prevent him from performing the heavy lifting involved in his previous dishwashing job, most dishwashing jobs involved less physical exertion. The ALJ concluded that Eheler's other nonexertional limitations, i.e., his emotional disorders and borderline intellectual ability, as well as the combined effect of those impairments and his back pain, were not so severe as to make him unable to perform such a dishwashing job and consequently found him not to be disabled. The Appeals Council affirmed the ALJ's decision.

On May 22, 1988, the district court, on appeal from the Secretary's decision, remanded the case to the Secretary on the ground that the Secretary's decision had not paid sufficient attention to plaintiff's nonexertional limitations. On remand, another ALJ found Eheler to be disabled. The Appeals Council adopted this recommendation as the final decision of the Secretary.

On January 4, 1990, the district court denied Eheler's motion for an award of attorney's fees and expenses under the EAJA. According to the district court, fees were not authorized pursuant to the EAJA because the Secretary's initial denial of benefits was substantially justified. Eheler appealed the denial of fees to this court.

The EAJA provides that a court shall award to a "prevailing party" fees and expenses incurred in any civil action unless the court finds that the position of the United States was "substantially justified." 28 U.S.C. § 2412(d) (1) (A). The Secretary bears the burden of demonstrating that his position was substantially justified. Kemp v. Bowen, 822 F.2d 966, 967 (10th Cir. 1987). A district court's decision to deny attorney fees under the EAJA is reviewed for abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 557-63 (1988); Oregon Environmental Council v. Kunzman, 817 F.2d 484, 496 (9th Cir. 1987); Petition of Hill, 775 F.2d 1037, 1040 (9th Cir. 1985).

The Social Security Act provides that in order to establish disability, a claimant must establish that he or she is no longer capable of holding the job previously held. The burden then shifts to the Secretary to establish that other jobs exist that the claimant could fill. Burkhart v. Bowen, 856 F.2d 1335, 1340 (9th Cir. 1988). Where the claimant establishes significant nonexertional limitations, the Secretary is required to offer the testimony of a vocational specialist to meet that burden. Id.; Desrosiers v. Secretary of Health & Human Servs., 846 F.2d 573, 577-79 (9th Cir. 1989) (Pregerson, J., concurring).

In this case, the district court abused its discretion in determining that the Secretary's decision concerning disability was substantially justified. The record demonstrates that Eheler had significant nonexertional limitations, including a borderline retarded I.Q., a mixed personality disorder, and a back condition that the ALJ found caused Eheler chronic lower back pain. The record is replete with evidence that his psychological problems and low intelligence caused him considerable difficulties in employment despite an obviously strong desire to work. His mental and interpersonal limitations are, by all accounts, severe enough that he will continue to have significant difficulty working around the public, performing any job requiring even routine decisionmaking, or engaging in any sort of employment--no matter how routine--that would subject him to stress. Moreover, as found by the ALJ, his lower back pain will continue to prevent Eheler from holding any job requiring him to carry objects of substantial weight.

The severe restrictions on his ability to work posed by Eheler's nonexertional limitations, fully demonstrated by his work history, are substantiated by Eheler's treating psychiatrist, Dr. Lynne Johnson. In a report dated March 27, 1986, Dr. Johnson stated of Eheler that "I suspect that he will need a sheltered work situation for some time to come." The opinion of such a treating physician must be given substantial weight. Embrey v. Bowen, 849 F.2d 418, 422 (9th Cir. 1988). In addition, another psychologist, Dr. Stephen Wagner, to whom Eheler was sent for a psychological evaluation, also suggested that semi-sheltered employment or work adjustment placement might best serve Eheler. Finally, the record indicates that vocational rehabilitation services, which had attempted to assist Eheler in seeking a job, subsequently determined that Eheler's limitations made him unemployable in the competitive job market. Rather than continuing efforts to place him in employment, his vocational rehabilitation counselor instead assisted him in securing Social Security disability benefits.

Considered in light of the substantial evidence that Eheler's nonexertional limitations significantly interfered with his ability to work, the Secretary's determination that Eheler was capable of engaging in any substantial gainful activity, see 42 U.S.C. § 423(d) (1) (a), including his former job of dishwashing, was not substantially justified. At the very least, Eheler's strong demonstration of significant nonexertional limitations obligated the ALJ to secure the testimony of a vocational specialist to demonstrate that Eheler was employable. When called by the ALJ at the hearing on remand from the district court, such a specialist stated that it was his firm opinion that claimant's limitations precluded him from competitive employment.

We reverse and remand to the district court to determine an appropriate fee award.

REVERSED and REMANDED.

FARRIS, Circuit Judge, dissenting:

I dissent. When Eheler applied for disability, the evidence was ambiguous as to whether he was no longer capable of performing the job he previously held. There was a basis in law and fact for denying his disability claim. Pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(d), the district court was within its discretion in denying attorney's fees and expenses.

Eheler worked as a dishwasher from 1979 until 1981. Although he injured his back on the job, he recovered and returned to work. Eheler claims that changes in his mental and physical condition after 1985 rendered him disabled. In support he presents the 1986 statement of Dr. Lynn Johnson, his treating psychologist, that he would need a sheltered work situation for some time to come.

However, Dr. Johnson's evaluation is not conclusive. Other psychologists and psychiatrists who evaluated Eheler did not report that his mental condition would preclude him from holding a competitive job. After examining Eheler on July 6, 1987, Dr. Monty Kuka found that Eheler had borderline intellectual functioning and personality problems, but concluded that he could hold a maintenance or light physical job that required limited interpersonal involvement. In a September 18, 1987 evaluation based on medical reports, Dr. Robert Batteen concluded that Eheler was employable at jobs involving menial tasks that did not require extensive contact with others.

There was also evidence that Eheler's back condition was not a basis for disability status. His treating psychologist, Dr. Johnson, acknowledged in 1985 that his back pain diminished while he was working and returned only after he was terminated. In a March 31, 1987 examination, Dr. Bill Tacke noted that Eheler had minimal back pain while working at his print shop job, where he performed heavy lifting. Dr. H.K. Peacock, an orthopedic surgeon, examined Eheler in October, 1987, and found little physical cause for his pain. Dr. Peacock concluded that on a physical basis, Eheler could perform medium work.

The record did not show that Eheler's mental and physical status changed so dramatically after 1985 as to conclusively warrant disability. The question on appeal is not whether we disagree with the decision to deny attorney's fees but whether that position was substantially justified. It was. I would affirm.