Carr v. Saul
593 U.S. 83 (2021)
Rule of Law:
When a statute or regulation does not explicitly require issue exhaustion, courts will not impose a judicially created issue-exhaustion requirement for structural constitutional challenges in non-adversarial administrative proceedings where the adjudicators lack the expertise and authority to grant the requested relief.
Facts:
- Willie Earl Carr and five other individuals applied for disability benefits from the Social Security Administration between 2013 and 2015.
- The SSA denied their applications for disability benefits.
- Each petitioner unsuccessfully challenged their adverse benefit determination in a hearing before an SSA Administrative Law Judge (ALJ).
- The SSA ALJs who denied petitioners’ claims had been selected by lower-level staff, not appointed by the head of the agency.
- The Supreme Court decided Lucia v. SEC (2018), holding that Securities and Exchange Commission ALJs appointed by lower-level staff violated the Constitution’s Appointments Clause because they were "Officers of the United States."
- The SSA's Acting Commissioner subsequently ratified the appointments of all SSA ALJs on July 16, 2018.
- The SSA later issued a ruling that claimants who had raised an Appointments Clause challenge in their administrative proceedings could receive a new review by a properly appointed adjudicator, but claimants who had not objected would receive no relief.
Procedural Posture:
- Petitioners' applications for disability benefits were denied by the Social Security Administration.
- Petitioners each sought and received a hearing before an SSA Administrative Law Judge (ALJ) to contest their denied applications.
- The SSA Appeals Council denied discretionary review in each of petitioners' cases.
- Petitioners subsequently sought judicial review of the SSA's decisions in federal district courts (or before federal magistrate judges), arguing they were entitled to new hearings before constitutionally appointed ALJs based on the Supreme Court's decision in Lucia v. SEC.
- The U.S. Courts of Appeals for the Eighth and Tenth Circuits, in three separate decisions (961 F.3d 1267, 963 F.3d 790, 964 F.3d 759), adopted the Commissioner's argument that petitioners, as appellants, had forfeited their Appointments Clause challenges by failing to raise them before the agency, thus denying them judicial review.
- The Supreme Court granted certiorari to resolve a circuit split, as the Third, Fourth, and Sixth Circuits had held that such challenges could be raised for the first time in federal court.
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Issue:
Does a Social Security Administration (SSA) disability claimant forfeit an Appointments Clause challenge by failing to raise it in administrative proceedings before an Administrative Law Judge (ALJ)?
Opinions:
Majority - Sotomayor, J.
No, a Social Security Administration (SSA) disability claimant does not forfeit an Appointments Clause challenge by failing to raise it in administrative proceedings before an Administrative Law Judge (ALJ). The Court held that judicially created issue-exhaustion requirements are inappropriate where no statute or regulation mandates them and the administrative proceedings are not sufficiently adversarial. Drawing on Sims v. Apfel, the Court emphasized that SSA proceedings, including those before ALJs, are largely inquisitorial rather than adversarial, with the agency having a duty to develop issues. The SSA’s own regulations confirm an informal, nonadversarial process where ALJs "look fully into the issues" and claimants are not expected to act as litigants developing issues. Furthermore, two specific considerations tip the scales against imposing exhaustion for Appointments Clause claims: first, agency adjudications are generally ill-suited to address structural constitutional challenges, which fall outside ALJs' technical expertise (Free Enterprise Fund v. Public Company Accounting Oversight Bd.); and second, a futility exception applies, as SSA ALJs lacked the authority to remedy defects in their own appointments, and internal agency guidance explicitly instructed ALJs not to rule on such constitutional challenges. The Commissioner’s arguments relying on L. A. Tucker Truck Lines, Inc. and the concept of "timely challenge" from Ryder v. United States and Lucia were deemed inapposite because those cases involved adversarial proceedings or statutory exhaustion requirements not present here, or involved contexts where the agency had the power to act.
Concurring - Thomas, J.
Yes, I agree with the Court's judgment that there is no issue-exhaustion requirement here, and I join Parts I, II–A, and II–B–2 of the Court's opinion. The nonadversarial nature of SSA ALJ proceedings, as outlined in the regulations and described in Sims v. Apfel, is the primary reason why a judicially created issue-exhaustion requirement should not be imposed. SSA proceedings are characterized by their informal, pro-claimant, and inquisitorial nature, allowing ALJs to raise issues on their own and with the Appeals Council having plenary review powers. While some regulations mention claimant objections, these do not transform the process into adversarial litigation where forfeiture is an appropriate consequence for overlooking an argument. I would end the analysis there, without needing to delve into the other considerations discussed by the majority.
Concurring - Breyer, J.
Yes, I agree with the Court's judgment that issue exhaustion is not required in this case, and I join Parts I, II–B–1, and II–B–2 of the Court’s opinion. While I generally believe that parties should raise arguments before an administrative agency in a timely fashion, even in the SSA context (Sims v. Apfel (Breyer, J., dissenting)), I agree with the Court that the Appointments Clause challenges at issue here fall within the well-established exceptions for constitutional and futile claims. It makes little sense to require claimants to present claims that agency adjudicators lack the authority or expertise to address.
Analysis:
This case significantly clarifies the applicability of judicially created issue-exhaustion requirements, particularly for structural constitutional challenges in administrative proceedings. It reinforces the principles from Sims v. Apfel that courts must carefully examine the nature of administrative proceedings, distinguishing between adversarial and inquisitorial systems. By emphasizing that agencies are generally ill-suited to address constitutional questions and that futility excuses exhaustion, Carr v. Saul provides claimants with greater flexibility to raise constitutional objections later in federal court, especially when administrative remedies are unavailable. This decision protects the ability of individuals to challenge fundamental constitutional issues related to agency structure, even if they were unaware or unable to raise them during the initial administrative process.
