Rose Nielsen appealed a district court's denial of her motion for attorney's fees under the Equal Access to Justice Act, or EAJA. This fee request arose after the Ninth Circuit previously reversed the Social Security Administration's denial of her disability benefits in a 2024 decision, Nielsen v. Colvin, and remanded the case to the agency for further proceedings. Having prevailed on the merits of her Social Security claim, Nielsen sought fees from the government. The district court denied the request, reasoning that the government's position was 'substantially justified' because multiple judicial actors—including the ALJ, the district judge, and a dissenting Ninth Circuit judge—had reached the opposite conclusion on the merits. The district court concluded that this disagreement among jurists meant that 'reasonable minds could differ' regarding the record, thereby satisfying the EAJA standard.
The Ninth Circuit panel, writing for the majority, held that the district court misapplied the legal standard for determining whether the government's position was 'substantially justified.' Under the EAJA, a prevailing plaintiff is entitled to fees unless the government's position was justified to a degree that could satisfy a reasonable person. The court explained that the district court made two critical errors. First, it improperly treated the ALJ's decision as a 'differing opinion' that supported the government's reasonableness. The court noted that the ALJ's decision was the underlying government position itself, not an independent perspective that could prove the position was reasonable. Second, the district court erred by basing its determination solely on the fact that other judges disagreed with the panel's majority. While a split decision can be an indicator of reasonableness, the Ninth Circuit clarified that 'disagreement between judges on the merits of a case is not dispositive.' The district court failed to analyze the reasonableness of the agency's position on the merits, which was bound by the panel's holding and rationale. The majority further reasoned that because the agency's decision was reversed for lacking substantial evidence—specifically, the ALJ's rejection of medical opinions and testimony without specific, legitimate reasons—the government's position was not substantially justified. The court cited precedent stating that in Social Security cases, it is 'only a decidedly unusual case' where a position is substantially justified even when the agency's decision is reversed for lack of substantial evidence.
The case is remanded to the district court to recalculate attorney's fees based on the correct legal analysis. The decision clarifies that Social Security claimants who win a remand on the merits due to a lack of substantial evidence are generally entitled to EAJA fees, as the government's position is rarely substantially justified in such circumstances. However, the ruling leaves open the possibility that a government position could be substantially justified even if the agency loses on the merits, provided the government can show its position was reasonable at the time of litigation and not merely a disagreement over ambiguous evidence. The district court must now determine the specific amount of fees owed without relying on the existence of judicial disagreement as a bar to the award.
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