Stout v. Commissioner, Social Security Administration ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GORDON STOUT, 
Plaintiff-Appellant, No. 04-36006
v.
 D.C. No.
CV-03-06113-MFM
COMMISSIONER, SOCIAL SECURITY
ADMINISTRATION, OPINION
Defendant-Appellee.

Appeal from the United States District Court
for the District of Oregon
Malcolm F. Marsh, District Judge, Presiding
Submitted December 9, 2005*
Portland, Oregon
Filed July 25, 2006
Before: James R. Browning, Dorothy W. Nelson, and
Diarmuid F. O’Scannlain, Circuit Judges.
Opinion by Judge Browning;
Dissent by Judge O’Scannlain
*This panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
8319
8322 STOUT v. COMMISSIONER, SSA
COUNSEL
Alan S. Graf and Kimberly K. Tucker, Alan Stuart Graf, P.C.,
Portland, Oregon, for the appellant.
Robert D. McCallum, Jr., Assistant Attorney General, United
States Department of Justice, Washington D.C.; Karin J.
Immergut, United States Attorney, and Craig J. Casey, Assis-
tant United States Attorney, United States Attorney’s Office,
Portland, Oregon; and Vikash Chhagan, Acting Regional
Chief Counsel, Region X, and L. Jamala Edwards, Assistant
Regional Counsel, Social Security Administration, Office of
the General Counsel, Seattle, Washington, for the appellee.
STOUT v. COMMISSIONER, SSA 8323
OPINION
BROWNING, Circuit Judge:
Gordon Stout appeals the district court’s judgment affirm-
ing the Social Security Commissioner’s (“Commissioner”)
denial of his applications for Disability Insurance Benefits
(“DIB”) and Supplemental Security Income (“SSI”) under
Titles II and XVI, respectively, of the Social Security Act.
Stout contends the Administrative Law Judge (“ALJ”)
improperly disregarded lay testimony regarding his inability
to work.1 We have jurisdiction under 28 U.S.C. § 1291.
Because the ALJ failed to discuss competent lay witness testi-
mony favorable to Stout, we reverse the district court’s judg-
ment and remand.
I
Stout filed his current claims for DIB and SSI in February
2000, alleging disability primarily due to back and mental
impairments with an onset date of April 18, 1997. The Social
Security Administration denied these claims initially and
upon reconsideration. Stout requested a hearing.
At his hearing in February 2002, Stout’s sister, Udena Stout
(“Udena”), testified that Stout’s impairments negatively affect
his ability to work. Additionally, the ALJ received into evi-
dence a letter from Stout’s brother-in-law, Jay Vasquez, with
whom Stout worked for approximately fifteen years. Similar
to Udena’s testimony, Vasquez described Stout’s inability to
work without certain accommodations. During a supplemental
hearing in March 2002, a vocational expert (“VE”) testified.
In response to the ALJ’s hypothetical, the VE opined that
Stout could perform one of his previous jobs and other jobs
in the national economy.
1
By memorandum disposition filed herewith, we affirm the district
court’s judgment as to all other issues Stout raises on appeal.
8324 STOUT v. COMMISSIONER, SSA
In his decision, the ALJ found Stout able to perform his
past relevant work as a vine pruner and, therefore, not dis-
abled within the meaning of the Social Security Act. The
Appeals Council denied Stout’s request for review, making
the ALJ’s decision the Commissioner’s final decision. See 20
C.F.R. § 404.981. Stout sought judicial review in the United
States District Court for the District of Oregon, which
affirmed the Commissioner’s decision. Stout timely appeals.
II
We review de novo the district court’s affirmance of the
Commissioner’s final decision. Webb v. Barnhart, 433 F.3d
683, 685-86 (9th Cir. 2005). We will uphold the Commission-
er’s denial of benefits if the Commissioner applied the correct
legal standards and substantial evidence supports the decision.
Id. at 686.
III
A
To medically qualify for benefits under the Social Security
Act, a claimant must establish “the inability to engage in any
substantial gainful activity by reason of any medically deter-
minable physical or mental impairment . . . which has lasted
or can be expected to last for a continuous period of not less
than 12 months.” 42 U.S.C. § 423(d)(1)(A). In assessing
whether a claimant is disabled, the ALJ follows a five-step,
sequential evaluation process:
Step one: Is the claimant presently engaged in sub-
stantial gainful activity? If so, the claimant is not dis-
abled. If not, proceed to step two.
Step two: Is the claimant’s alleged impairment suffi-
ciently severe to limit his or her ability to work? If
STOUT v. COMMISSIONER, SSA 8325
so, proceed to step three. If not, the claimant is not
disabled.
Step three: Does the claimant’s impairment, or com-
bination of impairments, meet or equal an impair-
ment listed in 20 C.F.R., pt. 404, subpt. P, app. 1? If
so, the claimant is disabled. If not, proceed to step
four.
Step four: Does the claimant possess the residual
functional capacity (“RFC”) to perform his or her
past relevant work? If so, the claimant is not dis-
abled. If not, proceed to step five.
Step five: Does the claimant’s RFC, when consid-
ered with the claimant’s age, education, and work
experience, allow him or her to adjust to other work
that exists in significant numbers in the national
economy? If so, the claimant is not disabled. If not,
the claimant is disabled.
See 20 C.F.R. §§ 404.1520, 416.920.
B
On appeal, Stout challenges the ALJ’s findings at steps four
and five.2 At step four, the ALJ determined Stout’s RFC—the
most Stout could still do despite his limitations. See 20 C.F.R.
§§ 404.1545, 416.945. Finding that Stout had various physical
restrictions and a limited capacity for teamwork and required
non-complex, “two to three step tasks which are fairly repeti-
tive,” the ALJ concluded Stout could “perform a wide range
of light unskilled work, and the inclusive sedentary level
work.” See 20 C.F.R. §§ 404.1567(a) & (b), 416.967(a) & (b).
2
Though the ALJ made no specific finding regarding step five, his deci-
sion notes the VE’s testimony about other work in the national economy
that a person with Stout’s RFC and vocational characteristics could per-
form.
8326 STOUT v. COMMISSIONER, SSA
Based upon Stout’s RFC and the VE’s testimony, the ALJ
found Stout able to perform his past relevant work as a vine
pruner. Consequently, the ALJ concluded Stout was not dis-
abled within the meaning of the Social Security Act. See 20
C.F.R. §§ 404.1560(b)(3) (“If we find that you have the
[RFC] to do your past relevant work, we will determine that
you can still do your past work and are not disabled.”),
416.960(b)(3) (same).
Stout contends the ALJ erred in finding he could perform
his past relevant work and other work in the national econ-
omy. Specifically, he argues the ALJ erred in rejecting with-
out comment the lay witness testimony of his sister, Udena,
and brother-in-law, Jay Vasquez. The Commissioner con-
cedes error but argues it was harmless. We disagree.
C
[1] In determining whether a claimant is disabled, an ALJ
must consider lay witness testimony concerning a claimant’s
ability to work. See Dodrill v. Shalala, 12 F.3d 915, 919 (9th
Cir. 1993); 20 C.F.R. §§ 404.1513(d)(4) & (e), 416.913(d)(4)
& (e). Indeed, “lay testimony as to a claimant’s symptoms or
how an impairment affects ability to work is competent evi-
dence . . . and therefore cannot be disregarded without com-
ment.” Nguyen v. Chater, 100 F.3d 1462, 1467 (9th Cir. 1996)
(citations omitted). Consequently, “[i]f the ALJ wishes to dis-
count the testimony of lay witnesses, he must give reasons
that are germane to each witness.” Dodrill, 12 F.3d at 919; see
also Lewis v. Apfel, 236 F.3d 503, 511 (“Lay testimony as to
a claimant’s symptoms is competent evidence that an ALJ
must take into account, unless he or she expressly determines
to disregard such testimony and gives reasons germane to
each witness for doing so.” (citations omitted)).
[2] Here, the ALJ was required to consider and comment
upon the uncontradicted lay testimony, as it concerned how
Stout’s impairments impact his ability to work. Both Udena
STOUT v. COMMISSIONER, SSA 8327
and Vasquez testified, consistent with medical evidence,
about Stout’s inability to deal with the demands of work.
After explaining Stout has “problems” accomplishing even
simple tasks, Vasquez, who worked with Stout for fifteen
years as both his boss and co-worker, provided the following
example: “I would have [Stout] clean out the tool trailer and
ask him to label nails, nuts, bolts, and screws. Ten minutes
later I would come back and he would be throwing things on
the ground, becoming frustrated with the simplest of tasks.”
Similarly, Udena testified that simple, monotonous tasks “eas-
ily frustrate[ ]” Stout, so much so that, “when something
doesn’t go just right[,] . . . he goes into a rage, blindly throw-
ing things and self-destruction [sic].”
[3] Moreover, both witnesses explained Stout’s uncommon
need for supervision to perform uncomplicated tasks. For
instance, Udena testified that for Stout to “keep focused on
the job at hand,” someone must “watch over him.” While she
stated Stout “could handle” simple jobs, such as “pick[ing] up
stuff in the yard,” she further clarified why he needs supervi-
sion to accomplish such jobs: “Mentally he would tend to
stray [from] what he’s supposed to be doing, find interest in
other things, wander off, and probably explore the area.”
Likewise, Vasquez stated that, for Stout to accomplish even
“menial labor,” he requires “constant supervision.”
[4] Although the VE specifically testified that a need for lit-
eral, constant supervision would not be acceptable in competi-
tive employment, save for one passing reference to Udena’s
testimony about Stout’s general self-destructive behaviors, the
ALJ’s decision wholly fails to mention Udena’s or Vasquez’s
testimony about how Stout’s impairments affect his ability to
work. Therefore, the ALJ erred. See Nguyen, 100 F.3d at
1467.
D
Conceding the ALJ’s silent disregard of the lay testimony
contravenes our case law and the controlling regulations, the
8328 STOUT v. COMMISSIONER, SSA
Commissioner requests we disregard the error as harmless.
The Commissioner’s argument echoes, if not recites verbatim,
the district court’s harmless error analysis, which it began by
reasoning that Udena’s testimony “suggests [Stout] has
always had intellectual deficits, depression, and episodes of
self-destructive behavior. Yet, [Stout] has been able to engage
in substantial work activity in the past.” As to Vasquez’s testi-
mony, the court reasoned that he worked with Stout for fifteen
years and, “[w]hile it took effort, [Stout] was able to engage
in substantial gainful activity while suffering from his current
impairments.” Because the district court found “[t]he medical
evidence establishes that nothing has changed,” it concluded
there was “no reason to overturn the ALJ’s decision.”
We note that two considerations caution, if not preclude, us
from adopting these justifications for embracing harmless
error here. First, the ALJ, not the district court, is required to
provide specific reasons for rejecting lay testimony. See
Dodrill, 12 F.3d at 919. Indeed, “we cannot rely on indepen-
dent findings of the district court.” Connett v. Barnhart, 340
F.3d 871, 874 (9th Cir. 2003). Rather, “[w]e are constrained
to review the reasons the ALJ asserts.” Id. Second, “we can-
not affirm the decision of an agency on a ground that the
agency did not invoke in making its decision.” Pinto v. Mas-
sanari, 249 F.3d 840, 847 (9th Cir. 2001) (citing SEC v.
Chenery Corp., 332 U.S. 194, 196 (1947)). Consequently, if
the Commissioner’s request that we dismiss the ALJ’s error
as harmless “invites this Court to affirm the denial of benefits
on a ground not invoked by the Commissioner in denying the
benefits originally, then we must decline.” Id. at 847-48.
We recognize harmless error applies in the Social Security
context. See Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir.
2005) (“A decision of the ALJ will not be reversed for errors
that are harmless.” (citing Curry v. Sullivan, 925 F.2d 1127,
1131 (9th Cir. 1991))). Fleshing out the standard’s contours
of application in this unique, nonadversarial area, however,
STOUT v. COMMISSIONER, SSA 8329
leads us to conclude we must decline the Commissioner’s cur-
rent invitation to employ it here.
We recently applied harmless error where, unlike here, the
ALJ expressly discredited testimony but erred in doing so. See
Batson v. Comm’r of Soc. Sec. Admin., 359 F.3d 1190, 1195-
97 (9th Cir. 2004). In Batson, the ALJ found the claimant’s
pain testimony incredible based, in part, on the claimant’s
statement that he watched over six hours of television per day.
Id. at 1196-97. The ALJ reasoned that the claimant’s ability
to sit for that amount of time while watching television indi-
cated he could sit for at least six hours of an eight-hour work-
day. Id. at 1197. Although the record did not confirm the
claimant always sat during his television viewing, we con-
cluded that any error the ALJ committed in assuming he did
was harmless. Id. We did so because the ALJ provided
numerous other record-supported reasons for discrediting the
claimant’s testimony, which allowed our review to determine
the ALJ’s error did not materially impact his decision. Id.We have also affirmed under the rubric of harmless error
where the mistake was nonprejudicial to the claimant or irrel-
evant to the ALJ’s ultimate disability conclusion. For exam-
ple, in Curry, we held harmless the ALJ’s erroneous
vocational findings that the claimant was fifty years of age
and had a G.E.D. because the findings were inconsequential
to the ALJ’s determination that she could perform “light
work.” 925 F.2d at 1130-31. Whether she was fifty or, as she
testified, fifty-three years old, the claimant fell within the
“closely approaching advanced age” category. Id. at 1131; see
20 C.F.R. § 404.1563(d) (explaining that, in considering age
as a vocational factor, claimants aged 50-54 are regarded as
“closely approaching advanced age”)). Likewise, the claim-
ant’s literacy and ability to communicate in English rendered
the G.E.D. finding “immaterial” to the ALJ’s nondisability
determination. Curry, 925 F.2d at 1131. Similarly, in Burch,
after “[a]ssuming without deciding” the ALJ erred in finding
the claimant’s obesity was not a “severe” impairment, we held
8330 STOUT v. COMMISSIONER, SSA
the assumptive error did not require reversal because the step
was “resolved in [the claimant’s] favor.” 400 F.3d at 682.
We have additionally found harmless errors that occurred
during a procedure or step the ALJ was not required to per-
form. See, e.g., Matthews v. Shalala, 10 F.3d 678, 681 (9th
Cir. 1993); Booz v. Sec’y of Health & Human Servs., 734 F.2d
1378, 1379-80 (9th Cir. 1984). In Booz, we held any error the
ALJ committed in applying the medical-vocational grids was
harmless because the exercise was “unnecessary” in light of
the claimant’s failure to overcome the nondisability presump-
tion arising from an earlier, unappealed decision. 734 F.2d at
1379-80. In Matthews, we similarly held harmless the ALJ’s
failure, “whether or not the ALJ erred,” to include the claim-
ant’s “staying in one position” limitation in his hypothetical
to the VE. 10 F.3d at 681. We did so after determining the
VE’s testimony was “not required” because the claimant had
failed to show he could not return to his past employment,
and, in any event, the claimant had already testified that his
past work required a combination of sitting and standing, thus
rendering the limitation “not relevant.” Id.[5] We discern two particulars from these cases. First, in
each case, the ALJ’s error, if any indeed existed, was inconse-
quential to the ultimate nondisability determination. See
Burch, 400 F.3d at 682 (concluding any error was nonprejudi-
cial); Matthews, 10 F.3d at 681 (concluding any error
occurred during hypothetical ALJ was “not required” to ask);
Curry, 925 F.2d at 1131 (concluding errors were “immateri-
al”); Booz, 734 F.2d at 1379-80 (concluding error occurred
during “unnecessary” procedure); see also Brawner v. Sec’y
of Health & Human Servs., 839 F.2d 432, 434 (9th Cir. 1988)
(concluding any error ALJ committed in classifying claim-
ant’s past work as “light” was harmless where record sup-
ported ALJ’s finding that claimant could perform other light
work). Second, in not one of these cases did we conclude, as
the Commissioner requests we do here, that an ALJ’s silent
disregard of lay testimony about how an impairment limits a
STOUT v. COMMISSIONER, SSA 8331
claimant’s ability to work was harmless. Cf. Batson, 359 F.3d
at 1197 (holding harmless ALJ’s partial reliance on assump-
tion record did not support where ALJ gave numerous other
record-supported reasons for adverse credibility finding).
Rather, we, along with our sister circuits, have consistently
reversed the Commissioner’s decisions for failure to comment
on such competent testimony. See, e.g., Merrill ex rel. Merrill
v. Apfel, 224 F.3d 1083, 1085-86 (9th Cir. 2000); Schneider
v. Comm’r of Soc. Sec. Admin., 223 F.3d 968, 974 (9th Cir.
2000); Nguyen, 100 F.3d at 1467; Dodrill, 12 F.3d at 919; see
also, e.g., Godbey v. Apfel, 238 F.3d 803, 809-10 (7th Cir.
2000); Lucas v. Sullivan, 918 F.2d 1567, 1574 (11th Cir.
1990); Huston v. Bowen, 838 F.2d 1125, 1131-33 (10th Cir.
1988); Basinger v. Heckler, 725 F.2d 1166, 1170 (8th Cir.
1984); Stewart v. Sec’y of Health, Educ. & Welfare, 714 F.2d
287, 290 (3rd Cir. 1983).
[6] In light of these cases, we hold that where the ALJ’s
error lies in a failure to properly discuss competent lay testi-
mony favorable to the claimant, a reviewing court cannot con-
sider the error harmless unless it can confidently conclude
that no reasonable ALJ, when fully crediting the testimony,
could have reached a different disability determination.
[7] In the present case, we cannot so conclude. If fully
credited, the lay testimony supports a conclusion that Stout’s
mental impairments render him in need of a special working
environment which, particularly when considering the VE’s
testimony, a reasonable ALJ could find precludes Stout from
returning to gainful employment. Consequently, the ALJ’s
error in failing to provide reasons for rejecting it was not
harmless.
[8] This conclusion is consistent with our prior harmless
error cases in this area. Unlike in Burch, we cannot say the
ALJ’s error here was nonprejudicial to Stout. Based on his
RFC determination and the VE’s response to a hypothetical—
which both failed to account for lay testimony about how
8332 STOUT v. COMMISSIONER, SSA
Stout’s impairments negatively affect his ability to work—the
ALJ found Stout could return to his previous work and was,
therefore, not disabled. Cf. Burch, 400 F.3d at 682 (conclud-
ing any error ALJ committed at step two was harmless
because the step was resolved in claimant’s favor). Nor can
we conclude, as we did in Curry, that the ALJ’s error was
irrelevant to his nondisability finding. Cf. 925 F.2d at 1131.
The VE specifically opined that constant supervision is unac-
ceptable in competitive employment; yet, the ALJ articulated
no reasons for dismissing the uncontradicted lay testimony
indicating Stout needed such supervision to perform even
simple tasks. This silent disregard thus leaves us, unlike in
Batson, with nothing to review to determine whether the error
materially impacted the ALJ’s ultimate decision. Cf. 359 F.3d
at 1190.
Moreover, the ALJ’s error did not occur during an unneces-
sary exercise or procedure. Cf. Matthews, 10 F.3d at 681;
Booz, 734 F.2d at 1379-80. Numerous regulations command
the ALJ to consider, throughout the sequential process, lay
testimony as to how claimants’ impairments affect their abil-
ity to work. See, e.g., 20 C.F.R. §§ 404.1513(d)(4) & (e),
404.1529(c), 404.1545, 416.913(d)(4) & (e), 416.929(c),
416.945. And, as we have held on many occasions, if the ALJ
wishes to discount such testimony in accord with this obliga-
tion, “he must give reasons that are germane to each witness.”
Dodrill, 12 F.3d at 919; Nguyen, 100 F.3d at 1467.
IV
[9] Because the ALJ failed to provide any reasons for
rejecting competent lay testimony, and because we conclude
that error was not harmless, substantial evidence does not sup-
port the Commissioner’s decision that Stout can perform his
previous work as a vine pruner. Consequently, we reverse the
district court’s judgment and remand with instructions to
STOUT v. COMMISSIONER, SSA 8333
remand to the Commissioner for further administrative pro-
ceedings consistent with this opinion.
REVERSED and REMANDED.
O’SCANNLAIN, Circuit Judge, dissenting:
I respectfully dissent from the majority’s conclusion that
the ALJ’s failure to comment properly on the lay witness tes-
timony of Stout’s sister and brother-in-law was not harmless
error. I am persuaded, as was the District Court, that even if
the lay witness testimony is credited, all the evidence taken as
a whole overwhelmingly supports denial of Stout’s applica-
tion for Disability Insurance Benefits and Supplemental
Security Income.
“A decision of the ALJ will not be reversed for errors that
are harmless.” Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir.
2005). Here, the lay testimony, when viewed in conjunction
with the evidence the ALJ properly considered, does not
undermine the ALJ’s finding that Stout can engage in his
prior work as a vine pruner.
The thrust of the lay testimony was that, in his past work
as a roofer, Stout had difficulty working with other people
without supervision. Although the letter from Stout’s brother-
in-law, Jay Vasquez, used the term “constant supervision” to
describe the assistance Stout requires, the remainder of
Vasquez’s letter indicates that Vasquez did not provide Stout
literal, constant supervision during the ten years Stout worked
in his construction company. It also indicates that after
Vasquez closed his construction company, Stout worked as a
roofer for another company without supervision and support
from a family member. Similarly, the testimony of Stout’s sis-
ter, Udena Stout, does not stand for the proposition that Stout
8334 STOUT v. COMMISSIONER, SSA
requires constant supervision. In fact, Udena testified that
Stout’s need for supervision would vary in relationship to the
complexity of the task. She indicated that Stout could handle
simple tasks that require minimal interaction with others,
although he would have a tendency to become bored or lose
focus.
All the limitations reasonably supported by the lay testi-
mony appeared in the ALJ’s RFC finding. The ALJ noted that
Stout has “mild to moderate” difficulties in social functioning
and in concentration, persistence, or pace. This information
appeared in the ALJ’s RFC, which noted that Stout “has a
limited capacity for teamwork and needs to minimize repeti-
tive public contact . . . . has a limited capacity for multitasking
with complex instructions . . . . [and] . . . “needs two to three
step tasks which are fairly repetitive.”
As the district court observed, Stout has engaged in sub-
stantial work activity in the past and there is no evidence, in
the lay testimony or elsewhere, that his mental capabilities
have changed. I accordingly agree with the district court’s
determination that the ALJ’s failure to comment properly on
the lay testimony is harmless error.