April 29, 2022 - This Week at the Ninth

This Week At The Ninth: Removal Power

This week, the Ninth Circuit considers the President’s authority to remove the Commissioner of Social Security.

KAUFMANN V. KIJAKAZI

The Court invalidates that statutory removal provision for the Commissioner of Social Security as unconstitutional, but upholds the Commissioner’s decision denying Plaintiff’s claim for social security benefits.

The Panel: Judges Graber, Bea, and M. Smith, with Judge Graber writing the opinion.

Key Highlight: “The removal provision violates separation of powers principles. For the purpose of the constitutional analysis, the Commissioner of Social Security is indistinguishable from the Director of the FHFA discussed in Collins and the Director of the CFPB discussed in Seila Law. As the Office of Legal Counsel emphasized, several features of the Social Security Administration . . . compel the conclusion that the removal provision is unconstitutional.”

Background: Plaintiff Jody Kaufmann (“Plaintiff”) filed for Social Security disability benefits in 2015. An administrative law judge (“ALJ”) denied that request, finding that Plaintiff’s testimony about her physical limitations was not credible. Plaintiff appealed to the Appeals Council, which denied the appeal in July 2019. Plaintiff then challenged the ALJ’s analysis in district court. The district court initially reversed the ALJ’s denial of benefits and remanded back to the agency. However, the Commissioner of Social Security filed a motion to alter or amend the judgment. The district court granted that motion.

On appeal, Plaintiff for the first time challenged the constitutionality of the statute governing the President’s removal authority over the Commissioner. Under 42 U.S.C. § 902(a)(3), the President is allowed to remove the Commissioner only for “neglect of duty or malfeasance in office.” Plaintiff argued that this removal provision is unconstitutional. She also challenged the district court’s grant of the Commissioner’s motion.

Result: The Ninth Circuit affirmed. Although Plaintiff did not raise her constitutional argument in the district court, the panel exercised its discretion to address that issue. The panel held that the removal provision is unconstitutional and that the President may remove the Commissioner of Social Security at will. The panel’s analysis followed the Supreme Court’s decisions in Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183 (2020) (holding that the removal provision for the Director of the Consumer Financial Protection Bureau was unconstitutional) and Collins v. Yellen, 141 S. Ct. 1761 (2021) (invalidating a similar scheme at the Federal Housing Finance Agency). The Ninth Circuit further held that the removal provision at issue is severable from the remainder of the statute. Finally, the Ninth Circuit held that the unconstitutional removal provision does not void the agency’s denial of benefits because it did not cause actual harm to Plaintiff.

The panel also addressed the district court’s order granting the Commissioner’s motion. The panel wrote that district courts have wide discretion in deciding motions under Federal Rule of Civil Procedure 59(e), and that the lower court here did not abuse its discretion. To the contrary, the panel held that the district court clearly erred in its original decision.