                                                                              FILED
                           NOT FOR PUBLICATION                                DEC 05 2012

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


JASON DAVID HUTTON,                              No. 11-15726

              Plaintiff - Appellant,             D.C. No. 3:09-cv-05388-CRB

  v.
                                                 MEMORANDUM*
MICHAEL J. ASTRUE, Commissioner of
Social Security,

              Defendant - Appellee.


                    Appeal from the United States District Court
                      for the Northern District of California
                    Charles R. Breyer, District Judge, Presiding

                      Argued and Submitted October 18, 2012
                            San Francisco, California

Before: WALLACE and BEA, Circuit Judges, and RESTANI, Judge.**

       Hutton appeals the decision of the district court affirming the determination

of the administrative law judge (“ALJ”) denying Hutton’s application for a period



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Jane A. Restani, Judge for the U.S. Court of
International Trade, sitting by designation.
of disability and disability insurance benefits. The ALJ committed legal error by

failing to consider appropriately relevant lay testimony and in failing to include

Hutton’s post-traumatic stress disorder (“PTSD”) in his assessment of Hutton’s

residual functional capacity (“RFC”) analysis at Step Four and in his hypotheticals

to the vocational expert at Step Five.

      The ALJ first considered Hutton’s PTSD at Step Two of the disability

analysis. There, he evaluated the limitations that Hutton’s PTSD generated via the

four functional areas outlined in 20 C.F.R. § 404.1520a(c)(3) (i.e. activities of

daily living; social functioning; concentration, persistence, or pace; and episodes of

decompensation). Based on Dr. Gregg’s opinion, the ALJ found Hutton suffered

no limitation with respect to daily activities or social functioning, “mild”

limitations in the area of concentration, persistence, or pace, and no episodes of

decompensation. Thus, he determined that Hutton’s PTSD existed but was

“nonsevere.”

      Regardless of its severity, however, the ALJ was still required to consider

Hutton’s PTSD when he determined Hutton’s RFC. See 20 C.F.R.

§ 404.1545(a)(2) (“We will consider all of your medically determinable

impairments of which we are aware, including your medically determinable

impairments that are not ‘severe[.]’”). The ALJ, however, failed to do so. Instead,


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the ALJ discredited Hutton, his treating physicians’ opinions, and the VA’s

disability rating. We do not base our action, however, on any of these

determinations by the ALJ. Importantly, the ALJ then mischaracterized Mrs.

Hutton’s testimony at least five times. Finally, the ALJ concluded that, based on

Hutton’s lack of credibility, his PTSD claims were in “great doubt.” On that basis,

the ALJ excluded Hutton’s PTSD from consideration. This exclusion was legal

error. To determine Hutton’s RFC properly, the ALJ was required to consider

Hutton’s physical impairments and the “mild” limitations his PTSD caused with

concentration, persistence, or pace, regardless of whether the ALJ doubted that

they were caused by Hutton’s ever-shifting military history. See 20 C.F.R. §

404.1545(a)(2). Further, while the ALJ was free to reject Hutton’s testimony as

not credible, there was no reason for the ALJ to disregard his own finding that

Hutton’s nonsevere PTSD caused some “mild” limitations in the areas of

concentration, persistence, or pace.

      The ALJ further erred by failing to address appropriately the lay testimony

presented by Hutton’s wife and his counselor. “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.” Lewis v. Apfel, 236 F.3d 503, 511 (9th Cir. 2001).


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      In this case, however, the ALJ purported to credit the testimony of Hutton’s

wife while repeatedly mischaracterizing her testimony. In describing the statement

from Hutton’s wife, the ALJ noted that it “says nothing about any problems with

PTSD – no hypervigilance, sleep problems, or nightmares – not a word about any

of these . . . .” By contrast, Mrs. Hutton stated that “[d]ue to PTSD from military

experience he has night terrors, doesn’t sleep well.”

      Additionally, the ALJ’s decision failed to refer to the testimony of Hutton's

college counselor, Mr. Frank. Mr. Frank detailed an incident in which Mr. Hutton

had difficulty in class due to an emotional reaction brought on by memories of his

military service, forcing his withdrawal from people and class. He also indicated

that due to “both [Hutton’s] physical and emotional pain,” Hutton’s completion of

his education has been a “monumental task.” Again, while an ALJ may discredit

testimony where it is inconsistent with the record, he must do so by providing

specific reasons germane to each witness.

      Accordingly, the decision of the district court is REVERSED, the

determination of the ALJ is VACATED, and the case is REMANDED for the

ALJ to reconsider his determination in accordance with this decision.

      Each party shall bear its own costs.




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