                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 11a0358n.06
                                                                                               FILED
                                             No. 09-6473
                                                                                         May 25, 2011
                           UNITED STATES COURT OF APPEALS                          LEONARD GREEN, Clerk
                                FOR THE SIXTH CIRCUIT


ROB CAUDILL,                                               )
                                                           )
       Plaintiff-Appellant,                                )         ON APPEAL FROM THE
                                                           )         UNITED STATES DISTRICT
               v.                                          )         COURT FOR THE EASTERN
                                                           )         DISTRICT OF KENTUCKY
COMMISSIONER OF SOCIAL SECURITY,                           )
                                                           )
       Defendant-Appellee.                                 )
                                                           )

BEFORE: MERRITT, ROGERS, and WHITE, Circuit Judges.

               ROGERS, Circuit Judge. Plaintiff Robert Caudill appeals the November 25, 2008

decision of an administrative law judge (ALJ) denying him social security disability insurance

benefits (SSI), and the district court’s decision to uphold the ALJ’s decision. On appeal, Caudill

argues that the ALJ erred in not finding him to be illiterate, and thus disabled, and in not classifying

him as a person of advanced age given his borderline-age status. Because the ALJ’s decision

contains no legal error and is otherwise supported by substantial evidence, the Commissioner’s

decision was properly upheld by the district court.

               Robert Caudill, born on January 26, 1954, is a former coal-mine employee living in

Kentucky. Caudill first applied for SSI in 1999. That claim was denied by the Social Security

Administration initially, upon reconsideration, and by decision of ALJ Burt R. Francis Jr. dated

August 28, 2001. ALJ Francis made an extensive evaluation of the evidence and concluded that,

although Caudill suffered from a variety of physical ailments and cognitive limitations, he was still
09-6473, Caudill v. Comm’r of Soc. Sec.

capable of working, and a significant number of suitable jobs existed in the national economy. The

Appeals Council denied Caudill’s request for review of ALJ Francis’s decision, making the decision

final.1 This decision was affirmed by the district court in 2002.

                 Caudill filed a new application for SSI on December 18, 2002. That application was

denied initially, upon reconsideration, and by decision of ALJ Richard C. Bentley dated March 17,

2005. The Appeals Council denied Caudill’s request for review of ALJ Bentley’s decision, making

the decision final.2 The case was remanded by the district court for further proceedings on April 24,

2006, due to the loss of Caudill’s December 2004 hearing tape. The Appeals Council vacated the

administrative decision and remanded the case for a new ALJ hearing. Prior to that remand, Caudill

filed a third application for SSI on March 31, 2005. That application was also denied initially and

on reconsideration.

                 On April 24, 2007, ALJ Bentley issued an opinion consolidating the 2002 and 2005

applications and denying them. Caudill appealed this decision to the district court,3 which remanded


        1
        Although no record of the Appeals Council’s denial of Caudill’s request for review is
available, ALJ Richard C. Bentley discusses this in his April 24, 2007 decision.
        2
        Although no record of the Appeals Council’s denial of Caudill’s request for review is
available, Caudill discusses this in his Complaint.
        3
         The record provides no indication of what action, if any, the Appeals Council took with
respect to ALJ Bentley’s April 24, 2007 decision, or of whether Caudill even sought review with the
Appeals Council before seeking review in the district court. The social security regulations provide
that “when a case is remanded by a Federal court for further consideration, the decision of the
administrative law judge will become the final decision of the Commissioner after remand on your
case unless the Appeals Council assumes jurisdiction of the case,” 20 C.F.R. § 416.1484(a), that the
Appeals Council may assume jurisdiction of the case if the claimant files written exceptions to the
ALJ’s decision, or on the Council’s own motion, id. § 416.1484(c), and that “[i]f no exceptions are
filed and the Appeals Council does not assume jurisdiction of your case, the decision of the

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09-6473, Caudill v. Comm’r of Soc. Sec.

the case for consideration of two issues: (1) the correct period of disability, and (2) Caudill’s

objection to inclusion of a report by a physician who was not licensed at the time of Caudill’s

examination. The Appeals Council vacated the administrative decision and remanded for a new ALJ

hearing. On October 8, 2008, ALJ Roger L. Reynolds held a hearing on Caudill’s claims. ALJ

Reynolds issued a decision on November 25, 2008, finding that Caudill was not disabled within the

meaning of the Social Security Act and denying him SSI. The Appeals Council took no action with

respect to ALJ Reynolds’s decision,4 thus making that decision final. Caudill sought review in the

district court on January 22, 2009.

                 At the time of the October 8, 2008 hearing, Caudill was fifty-four years old, and was

less than four months away from turning fifty-five. He was two months away from turning fifty-five

when ALJ Reynolds issued his November 25, 2008 decision. Caudill attended school through

eleventh grade. He attended some classes in twelfth grade, but did not graduate from high school.

He attended regular (as opposed to special education) classes during the course of his education.

There is some evidence that he was required to repeat the third and fourth grades. A psychological

evaluation conducted in 2000 determined that Caudill reads at a second-grade level. He has been

diagnosed with developmental reading disorder. Caudill testified that he has difficulty reading and

writing. He testified that when he tries to read a newspaper, he is unable to understand “a whole lot”




administrative law judge becomes the final decision of the Commission after remand,” id. §
416.1484(d). In any event, nether party claims that ALJ Bentley’s April 24, 2007 was not final for
purposes of district-court review.
        4
         Although no record is available showing that the Appeals Council took no action with
respect to ALJ Reynolds’s decision, Caudill discusses this in his motion for summary judgment.

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09-6473, Caudill v. Comm’r of Soc. Sec.

of it, and that somebody usually helps him when he is paying bills. However, ALJ Reynolds noted

that Caudill had previously stated that he could read and write a grocery list.

                 The district court’s opinion summarizes relevant information in this case:

        [Caudill] has approximately eighteen years of experience working in coal mines as
        a roof bolter. [Tr., p. 534-36] His alleged disability stems from diabetes and pain in
        his back, shoulder, and legs. [Tr., p. 124] After reviewing the record and the
        testimony presented at the hearing, the ALJ concluded that Caudill suffered from the
        severe impairments of degenerative disc disease at L3/4 and L4/5 with small
        herniated nucleus pulposus at L5/S1; insulin dependent diabetes mellitus; rule-out
        cardiomegaly; adjustment disorder with depressed mood; borderline intellectual
        functioning, estimated; developmental reading disorder; alcohol abuse/dependence,
        allegedly in remission; and hypothyroidism. [Tr., p. 487] Notwithstanding these
        impairments, the ALJ found that Caudill retained the residual functional capacity
        (“RFC”) to perform light work

                 with lifting and carrying only from tabletop or countertop level of
                 approximately 20 pounds occasionally and 10 pounds frequently;
                 standing a total of approximately 6-8 hours in an 8-hour workday and
                 approximately 1 hour without interruption; sitting a total of
                 approximately 6-8 hours and approximately 1 hour without
                 interruption; requires a sit/stand option at one-hour intervals; can
                 occasionally climb stairs with handrails, ladders, scaffolds or
                 stepstools; occasionally balance, stoop, crouch, kneel and crawl.
                 There must be no constant, uninterrupted use of upper extremities for
                 8 hours of an 8-hour workday for purposes of reaching, handling,
                 feeling and pushing/pulling; must avoid unprotected heights, moving
                 machinery, temperature extremes, chemicals, dust, fumes, excessive
                 humidity and all other usual pulmonary irritants.

        [Tr., p. 489-90] The ALJ further found that Caudill has

                 a fair ability to follow work rules, relate to coworkers, deal with the
                 public, use judgment, interact with supervisors, deal with work
                 s t r e s s e s , f u n c t i o n i n d e p e n d e n t l y, a n d m a i n t a i n
                 attention/concentration. He has poor ability to understand, remember
                 and carry out complex job instructions. He has fair ability to
                 understand, remember and carry out detailed but not complex job
                 instructions. He has good ability to understand, remember and carry
                 out simple job instructions. He has fair ability to maintain personal

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09-6473, Caudill v. Comm’r of Soc. Sec.

                 appearance, behave in an emotionally stable manner, relate
                 predictably in social situations, and demonstrate reliability.

        [Tr., p. 490] This RFC is identical to the RFC in the August 28, 2001 hearing
        decision. [Id., n.1] As a result of ALJ Reynolds’s assessment, Caudill was denied
        SSI. [Tr., p. 494]

Caudill v. Astrue, No. 7:06-028-DCR, 2009 WL 3270491, at *1-2 (E.D. Ky. Oct. 9, 2009).

                 On October 9, 2009, the district court granted the Commissioner of Social Security’s

motion for summary judgment, denied Caudill’s cross-motion for summary judgment, and dismissed

Caudill’s SSI claim. Caudill timely appealed to this court. Caudill raises only two issues on appeal:

(1) whether the ALJ should have found Caudill to be “illiterate” as defined in 20 C.F.R. §

416.964(b)(1), and thus disabled; and (2) whether the ALJ properly found Caudill to be an individual

“closely approaching advanced age,” rather than a person of “advanced age,” given Caudill’s

borderline age status.

I.      The ALJ properly found Caudill to have a “limited education” and that Caudill was
              not “illiterate.”

                 Substantial evidence supports the ALJ’s determination that Caudill had a “limited

education” and was not “illiterate.” Grid Rule 202.09 (included in 20 C.F.R. Part 404, Subpart P,

Appendix 2, Table 2) provides that an individual who is “closely approaching advanced age”—that

is, age fifty to fifty-four—is disabled if she is “illiterate or unable to communicate in English.”

Caudill was fifty-four at the time of ALJ Reynolds’s hearing and decision, and thus was “closely

approaching advanced age.” In his decision denying Caudill SSI, ALJ Reynolds found that “[t]he

claimant has a limited education and is able to communicate in English (20 CFR 416.964).” 2008




                                                  5
09-6473, Caudill v. Comm’r of Soc. Sec.

SSI Decision at 9. Pursuant to Grid Rules 202.10 and 202.11, this compelled a determination that

Caudill was not disabled.

                 Caudill argues that ALJ Reynolds improperly adopted ALJ Francis’s previous finding

that Caudill has “a limited education,” pursuant to the res judicata rule of Drummond v.

Commissioner of Social Security, 126 F.3d 837 (6th Cir. 1997). However, it is not entirely clear

whether the ALJ reached this finding independently, based on his own analysis of Caudill’s

evidence, or by simply adopting ALJ Francis’s finding under Drummond. The ALJ noted that

Drummond

                 requires that consideration be given to the prior Administrative Law
                 Judge decision which contains a finding of a claimant’s residual
                 functional capacity.      The Drummond decision requires the
                 undersigned as the adjudicator of this subsequent claim to adopt and
                 be bound by the finding of a claimant’s residual functional capacity
                 or other findings required at a step in the sequential evaluation
                 process. The undersigned cannot reexamine or redetermine the
                 finding of a claimant’s residual functional capacity or other issues
                 previously determined in the absence of new and additional material
                 evidence or changed circumstances.

2008 SSI Decision at 3-4. The ALJ also stated that he “adopts the residual functional capacity as

set forth in the previous final decision as there is no medical evidence of record in contravention of

this finding. The undersigned finds no basis for reopening the prior decision in that the conditions

for reopening are not met.” Id. at 4. The residual functional capacity assessment, though, is not at

issue in this appeal; the finding of “limited education” versus “illiteracy” is. The ALJ gave no

indication that he adopted this particular finding from ALJ Francis’s decision pursuant to

Drummond. Also, the ALJ cited record evidence that would support a finding of “limited education”

as opposed to “illiteracy” independent of the Drummond rule: Caudill admitted being able to read

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09-6473, Caudill v. Comm’r of Soc. Sec.

and write a grocery list; Caudill successfully worked for many years; Dr. Stuart Cook opined that

Caudill has at least a fair ability to understand, retain, and follow instructions; and Caudill’s

educational level.

                 However the ALJ’s “limited education” finding is viewed, whether as an application

of Drummond or as an independent finding, the finding must be upheld. If ALJ Reynolds adopted

ALJ Francis’s prior finding that Caudill has a “limited education” and is not “illiterate” pursuant to

Drummond, this was proper because the Drummond principle could properly be relied upon in the

instant case. In Drummond, the claimant’s initial claim for SSI was denied when the ALJ found that

Drummond retained a residual functional capacity for sedentary work. Drummond, 126 F.3d at 838.

When Drummond later re-filed her disability claim, a second ALJ found that Drummond retained

a residual functional capacity suitable for medium-level work, unlike the sedentary residual-

functional-capacity finding of the first ALJ, and denied the re-filed claim. Id. at 839. After

explaining that “[r]es judicata applies in an administrative law context following a trial type

hearing,” id. at 841, this court held that the second ALJ was bound to the sedentary residual-

functional-capacity determination of the first ALJ because there was no new or additional evidence

of an improvement in Drummond’s condition, id. at 842. “Just as a social security claimant is barred

from relitigating an issue that has been previously determined, so is the Commissioner.” Id.

                 Caudill argues that a Drummond-style bar on relitigation cannot apply because the

earlier determination did not depend on illiteracy, but the same argument could have been made in

Drummond itself. The issue in Drummond was the residual-functional-capacity determination. A

medium-level-work residual-functional-capacity determination would not have changed the outcome


                                                  7
09-6473, Caudill v. Comm’r of Soc. Sec.

of the first ALJ hearing in Drummond, because both sedentary and medium residual functional

capacities would have resulted in a "not disabled" finding due to Drummond’s age category at the

time of her first hearing. These circumstances in Drummond are the same in the present case, except

that the issue here is not Caudill’s residual functional capacity, but his literacy/educational level.

In 2001, ALJ Francis found Caudill to have a "limited education" and to not be "illiterate." In 2008,

ALJ Reynolds did the same. Due to Caudill’s age classification at the time of the 2001 hearing, even

if Caudill had been found “illiterate,” he would still have been found "not disabled.” Hence, both

Caudill and Drummond lacked the incentive to litigate the issue that later became

dispositive—literacy in Caudill and residual functional capacity in Drummond. In both cases, the

resolution of these issues was not material to the outcome of their first hearings. And just as in

Drummond, Caudill introduced no new or additional evidence with respect to “illiteracy” versus

“limited education.” The Drummond res judicata rule thus applied just as readily to Caudill’s case

as it did to Drummond’s, and supported ALJ Reynolds’ adoption of ALJ Francis’s finding that

Caudill had a “limited education” and was not “illiterate.”

                 In any event, it is not obvious that ALJ Reynolds merely adopted ALJ Francis’s

finding of “limited education” versus “illiterate” pursuant to Drummond. Rather, ALJ Reynolds’s

finding appears as well to be an independent finding made on the evidence before him. This

independent finding is clearly supported by substantial evidence. “Substantial evidence is more than

a scintilla of evidence but less than a preponderance and is such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion.” McClanaham v. Comm’r of Soc. Sec., 474

F.3d 830, 833 (6th Cir. 2006). “The findings of the Commissioner are not subject to reversal merely


                                                  8
09-6473, Caudill v. Comm’r of Soc. Sec.

because there exists in the record substantial evidence to support a different conclusion . . . . This

is so because there is a ‘zone of choice’ within which the Commissioner can act, without the fear of

court interference.” Id. (alteration in original).

                 While record evidence showed that Caudill had a second-grade reading level and was

diagnosed with developmental reading disorder, the record also showed the following: he admitted

being able to read and write a grocery list; he successfully worked for many years; Dr. Cook opined

that Caudill has at least a fair ability to understand, retain, and follow instructions; and he attended

school into the twelfth grade and his school records showed that he averaged Bs, Cs, and Ds in high

school.5 This constitutes substantial evidence that Caudill is not “illiterate.” Also, the ALJ found

Caudill’s description of his condition and ailments to be less than credible.6 “The ALJ’s crediblity

findings are subject to substantial deference on review . . . .” White v. Comm’r of Soc. Sec., 572 F.3d

272, 288 (6th Cir. 2009) (quoting Barker v. Shalala, 40 F.3d 789, 795 (6th Cir. 1994)). This

credibility assessment provides further evidence supporting the ALJ’s finding of “limited education”

as opposed to “illiterate.” Thus, the ALJ’s “limited education” finding is supported by substantial

evidence, independently of the Drummond rule.

II.     The ALJ properly categorized Caudill as an individual “closely approaching advanced
              age” rather than a person of “advanced age.”




        5
        Although ALJ Reynolds did not explicitly state in his hearing decision that Caudill attended
school into the twelfth grade and that his grades averaged Bs, Cs, and Ds, the ALJ did refer to
Caudill’s “education” on several occasions. See 2008 SSI Decision at 9, 10.
        6
        The ALJ found both Caudill’s physical-health and mental-health symptoms to be less than
credible. See 2008 SSI Decision at 5 (mental-health symptoms), 8 (physical-health symptoms).

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09-6473, Caudill v. Comm’r of Soc. Sec.

                 The ALJ also properly categorized Caudill as an individual “closely approaching

advanced age” rather than a person of “advanced age,” notwithstanding Caudill’s borderline-age

status. Although Caudill’s age at the time of ALJ Reynolds’s hearing decision (approximately fifty-

four and ten months) placed him in a borderline-age situation, the ALJ provided a sufficient

explanation of his disability determination to assure the court that his decision was supported by

substantial evidence. This is in accordance with the holding of Bowie v. Commissioner of Social

Security, 539 F.3d 395 (6th Cir. 2008).

                 At the time the hearing decision was issued, Caudill was within two months of being

re-classified from the “closely approaching advanced age” category to the “advanced age” category.

Had he been classified in the “advanced age” category, Caudill would have been deemed disabled

pursuant to Grid Rule 202.02. The ALJ, however, classified Caudill in the “closely approaching

advanced age” category without further explanation. Under 20 C.F.R. § 416.963(b), the Social

Security Administration “will not apply the age categories mechanically in a borderline situation.”

According to the Social Security Administration’s Hearings, Appeals, and Litigation Law Manual

(HALLEX), in borderline-age situations, the ALJ decides which age category to apply using a

“sliding scale approach.” Application of the Medical-Vocational Guidelines in Borderline Age

Situations, HALLEX II-5-3-2, 2003 WL 25498826. Under this approach, “the claimant must show

progressively more additional vocational adversity(ies)—to support use of the higher age—as the

time period between the claimant’s actual age and his or her attainment of the next higher age

category lengthens.” Id. Examples of such “additional vocational adversities” include being barely

literate in English, having only a marginal ability to communicate in English, and having work


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09-6473, Caudill v. Comm’r of Soc. Sec.

experience in unskilled jobs in one isolated industry or work setting. Id. Also, “[o]ther adverse

circumstances in individual cases may justify using the higher age category.” Id.

                 However, as this court held in Bowie, these regulations “do[] not impose on ALJs a

per se procedural requirement to address borderline age categorization in every borderline case.”

Bowie, 539 F.3d at 399. Although ALJs must not apply the age categories mechanically and must

“consider whether use of an older age category would be appropriate in a borderline case, nothing

in this language obligates an ALJ to address a claimant’s borderline age situation in his opinion or

explain his thought process in arriving at a particular age-category determination.” Id. “Rather,”

according to Bowie, “the regulation merely promises claimants that the Administration will

‘consider’ veering from the chronological-age default in borderline situations.” Id. Quoting

HALLEX language, we explained that “[a]bsent a showing of additional adversity(ies) justifying use

of the higher age category, the adjudicator will use the claimant’s chronological age—even when the

time period is only a few days. The adjudicator need not explain his or her use of the claimant’s

chronological age.” Id. at 400. Bowie presented no record evidence that she suffered from any

“additional vocational adversities” that might justify placing her in a higher age category, and her

disability determination was otherwise supported by substantial evidence. Id. at 401. That being the

case, we upheld an ALJ decision that used Bowie’s chronological-age category even though the ALJ

provided no explanation of his reasons for doing so. Id.

                 Caudill argues that dicta from Bowie demands vacating the ALJ’s finding regarding

Caudill’s age category. However, it is Bowie’s holding, not its dicta, that applies to Caudill’s case,

such that the ALJ’s decision should be upheld here just as it was in Bowie. The dicta in question


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09-6473, Caudill v. Comm’r of Soc. Sec.

comes from a hypothetical example the Bowie court gave in explaining its decision. The court

explained that, “[f]or example, substantial evidence might be lacking where an ALJ, with no

explanation, places a claimant in the ‘younger individual’ age category who is 49 years and 11

months, unskilled, sedentary, barely literate, and whose only previous work experience was in the

fishing industry.” Id. Under this hypothetical, “the claimant’s additional vocational adversities

would be significant and would merit some discussion of proper age categorization in order to meet

the substantial-evidence threshold.” Id. In comparing Caudill’s circumstances to those of the

hypothetical example, the evidence shows that Caudill is “barely literate”—his second-grade reading

level, developmental-reading-disorder diagnosis, and testimony of reading and paperwork

difficulties—and that his work in the mining industry is at least as isolated as the fishing or forestry

industries. To this extent, Caudill’s scenario is similar to the hypothetical given by the Bowie court.

                 However, the differences between Caudill and the hypothetical are more striking, such

that Caudill’s case is controlled by Bowie’s holding instead of its dicta. Caudill's work is semi-

skilled, not unskilled as in the hypothetical, and he is capable of performing light work, rather than

sedentary work as in the hypothetical. Bowie could only perform unskilled, sedentary work, just as

in the hypothetical, and yet the court still found “no evidence in the record that [she] suffered from

any ‘additional vocational adversities’ that might justify placing her in the higher age category,” id.,

or that would even require the ALJ to explain the reasons for his age-categorization decision.

Moreover, it is questionable whether the record truly evidences that Caudill is “barely literate,”7



        7
         The term “barely literate” is not defined in the Code of Federal Regulations, HALLEX II-5-
3-2, or the Social Security Administration’s Program Operations Manual System.

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09-6473, Caudill v. Comm’r of Soc. Sec.

given the fact that he can at least read and write a grocery list, he attended school all the way into the

twelfth grade, and his high school records average Bs and Cs as well as Ds. ALJ Reynolds also

found Caudill’s testimony about his alleged limitations less than credible (even regarding his mental

limitations, as discussed above). In Bowie, by comparison, although the ALJ “did not find Bowie’s

allegations regarding her limitations entirely credible to begin with,” id., he nonetheless “gave her

the benefit of the doubt.” Id.

                 In sum, Caudill’s case compares much less obviously to Bowie’s hypothetical

scenario than would at first appear. In fact, Bowie herself may even be more akin to the hypothetical

than Caudill: Bowie had two limitations described in the hypothetical (unskilled work history and

ability to do sedentary work) and she was given the benefit of the doubt regarding the credibility of

her alleged limitations. Caudill, on the other hand, has at most one limitation (work history in an

isolated industry) and some inconclusive and contradictory evidence of another limitation

(supposedly being “barely literate”). Further, the ALJ found Caudill’s alleged limitations to be less

than credible. Although the two cases are not precisely on all fours, Caudill’s case falls within

Bowie’s holding.

                 The judgment of the district court is affirmed.




                                                   13
09-6473, Caudill v. Comm’r of Soc. Sec.

        HELENE N. WHITE, Circuit Judge (concurring in part and dissenting in part). I concur in

Part II of the majority opinion finding that the ALJ’s decision not to classify Caudill as a person of

advanced age was supported by substantial evidence. Although Caudill’s argument is not without

merit, on the facts of this case, I cannot say that the ALJ’s failure to explain his use of Caudill’s

chronological age was reversible error. See Bowie, 539 F.3d at 399-400. In any event, Caudill is

now older than 55, and thus can presumably reapply for benefits.

        I respectfully dissent from my colleagues’ conclusion in Part I, however. I first note that on

my reading of the record, the ALJ rested his finding that Caudill had a “limited education” on the

res judicata rule, not on his own independent analysis of the evidence. In his decision, ALJ Reynolds

incorporated by reference the findings and conclusions in the prior decision rendered by ALJ Francis

in 2001. ALJ Reynolds stated that pursuant to Drummond v. Commissioner of Social Security, 126

F.3d 837 (6th Cir. 1997), he was bound by those previous findings unless presented with new or

additional material evidence or changed circumstances. (2008 Decision, at Tr. 487.) Specifically,

ALJ Reynolds stated:

        the undersigned takes administrative notice, by reference, of those findings and
        conclusions appearing in the record through the date of the prior decisions entered
        by Administrative Law Judge B.R. Francis on August 28, 2001, and [b]y
        Administrative Law Judge Richard Bentley on March 17, 2005 and April 24, 2007
        except where they conflict with the findings of fact and conclusions of law herein.
        The 6th Circuit case of Drummond v. Commissioner of Social Security, 126 F.3d 837
        (6th Cir. 1997) requires that consideration be given to the prior Administrative Law
        Judge decision which contains a finding of a claimant’s residual functional capacity.
        The Drummond decision requires the undersigned as the adjudicator of this
        subsequent claim to adopt and be bound by the prior finding of a claimant’s residual
        functional capacity or other findings required at a step in the sequential evaluation
        process. The undersigned cannot reexamine or redetermine the finding of a
        claimant’s residual functional capacity or other issues previously determined in the
        absence of new and additional material evidence or changed circumstances.

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09-6473, Caudill v. Comm’r of Soc. Sec.

(Id. at 486-87 (emphases added).) Although not totally clear, this language indicates that ALJ

Reynolds thought himself bound by previous ALJs’ determinations of RFC and other issues as a

matter of res judicata or collateral estoppel. Although the record before ALJ Reynolds could have

supported a finding of either “limited education” or illiteracy, ALJ Reynolds did not make his own

determination of the issue. Because I conclude that Drummond does not settle questions regarding

how principles of collateral estoppel apply in this case, I depart from the majority’s opinion.

        I agree that Drummond held that principles of res judicata apply to decisions of the

Commissioner made through trial-type proceedings by ALJs. Drummond established that principles

of res judicata bind the government to the same extent they bind claimants. 126 F.3d at 841-42. But

the case does not describe how to apply res judicata or collateral estoppel in a given case. In

Drummond, the Commissioner argued “that res judicata does not apply against the Social Security

Administration because it was not a party to the proceedings before the ALJ.” Id. at 840-41. This

argument was based on 42 U.S.C. § 405(h), which provides that “[t]he findings and decision of the

Commissioner of Social Security after a hearing shall be binding upon all individuals who were

parties to such hearing.” The court “reject[ed] the Commissioner’s contention that the Social

Security Administration has unfettered discretion to reexamine issues previously determined absent

new and additional evidence,” and held that to the extent that § 405(h) binds claimants, “[p]rinciples

of finality and fundamental fairness” require that it also bind the Commissioner. 126 F.3d at 842

(second quotation from Lively v. Sec’y of Health & Human Servs., 820 F.2d 1391, 1392 (4th Cir.

1987)). Thus, “[j]ust as a social security claimant is barred from relitigating an issue that has been

previously determined, so is the Commissioner.” Id.


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09-6473, Caudill v. Comm’r of Soc. Sec.

        There is no indication in Drummond that this Court considered argument about whether and

how to apply traditional, common-law principles of res judicata and collateral estoppel in social

security cases.

        In Hammer v. I.N.S., 195 F.3d 836 (6th Cir. 1999), this court enumerated five elements

required for collateral estoppel to apply:

        (1) the issue in the subsequent litigation is identical to that resolved in the earlier
        litigation, (2) the issue was actually litigated and decided in the prior action, (3) the
        resolution of the issue was necessary and essential to a judgment on the merits in the
        prior litigation, (4) the party to be estopped was a party to the prior litigation (or in
        privity with such a party), and (5) the party to be estopped had a full and fair
        opportunity to litigate the issue.

Id. at 840.1 This Court has not yet decided “whether a party asserting collateral estoppel in a Social

Security case, in addition to making the § 405(h) showing that a prior ALJ has made a finding on the

same question sought to be litigated, must establish the traditional elements of collateral estoppel.”2



        1
       Other cases in this Circuit have stated the elements differently. In Kosinski v. C.I.R., 541
F.3d 671 (6th Cir. 2008), this court identified four required factors:

        (1) the precise issue raised in the present case must have been raised and actually
        litigated in the prior proceeding; (2) determination of the issue must have been
        necessary to the outcome of the prior proceeding; (3) the prior proceeding must have
        resulted in a final judgment on the merits; and (4) the party against whom estoppel
        is sought must have had a full and fair opportunity to litigate the issue in the prior
        proceeding.

Id. at 675 (quoting United States v. Cinemark USA, Inc., 348 F.3d 569, 583 (6th Cir. 2003)).
        2
         42 U.S.C. § 405(h) provides:
        The findings and decision of the Commissioner of Social Security after a hearing
        shall be binding upon all individuals who were parties to such hearing. No findings
        of fact or decision of the Commissioner of Social Security shall be reviewed by any
        person, tribunal, or governmental agency except as herein provided.

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09-6473, Caudill v. Comm’r of Soc. Sec.

Brewster v. Barnhart, 145 F. App’x 542, 547 (6th Cir. 2005) (unpublished). In the unpublished

opinion of Rogers v. Commissioner of Social Security, 225 F.3d 659, 2000 WL 799332, at *5 (6th

Cir. 2000) (unpublished table opinion), this Court did apply principles of collateral estoppel to a

social security disability case, with particular focus on the question whether “the party attempting

to relitigate an issue had a full and fair opportunity to try the issue it had previously lost” and

whether the issue in question was “essential to the prior judgment.” Id. Prior to that case, in the

unpublished opinion of Ginnetti v. Sullivan, 983 F.2d 1066, 1992 WL 393593, at *2 (6th Cir. 1992)

(unpublished table opinion), this Court applied traditional collateral-estoppel rules in holding that

an ALJ’s determination regarding whether a claimant was “‘without fault’ in receiving overpayments

of benefits” had preclusive effect. In Brewster, also unpublished, the court referenced Rogers, but

declined to decide whether to apply “traditional collateral estoppel rules to cases also governed by

§ 405(h) because . . . even under the traditional collateral estoppel framework, [the second ALJ] was

bound by [the first ALJ’s] earlier finding on [the claimant’s] past relevant work.” Brewster, 145 F.

App’x at 457.

        Application of traditional rules of collateral estoppel would lead to the conclusion that ALJ

Reynolds was not precluded from making his own de novo decision about Caudill’s literacy. It is

well-settled that both res judicata and collateral estoppel apply to trial-type proceedings by

administrative agencies. See Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 107 (1991)

(“We have long favored application of the common-law doctrines of collateral estoppel (as to issues)

and res judicata (as to claims) to those determinations of administrative bodies that have attained

finality.”); United States v. Utah Constr. & Mining Co., 384 U.S. 394, 421 (1966). This Circuit has


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09-6473, Caudill v. Comm’r of Soc. Sec.

repeatedly applied traditional common-law rules of collateral estoppel to assessing the preclusive

effect of proceedings by administrative agencies, including decisions of immigration judges,

Hammer, 195 F.3d at 840, the National Labor Relations Board, Olchowik v. Sheet Metal Workers’

Int’l Ass’n, 875 F.2d 555, 557 (6th Cir. 1989), the Armed Services Board of Contract Appeals,

United States ex rel. Spectrum Control Sys., Inc. v. Staffco Constr., Inc., 107 F. App’x 453, 457-58

(6th Cir. 2004) (unpublished), and state administrative tribunals, Macy v. Hopkins Cnty. Sch. Bd. of

Educ., 484 F.3d 357, 367-68 (6th Cir. 2007). These authorities, combined with our unpublished

opinions in Rogers and Ginnetti, strongly suggest that traditional rules of collateral estoppel should

apply to the decisions of ALJs in social security disability cases as well.

        This conclusion is bolstered by practical considerations. If ALJs and courts are prevented

from applying the traditional collateral estoppel test, all findings of ALJs in SSI hearings are binding

on future ALJs considering claims by the same claimant, regardless of whether the issue is essential

to the judgment or whether the claimant had a full and fair opportunity to litigate it. This would have

the effect of requiring claimants to contest and appeal every finding that is immaterial to the outcome

of their claim at the time of the proceeding, but that could later become material in a new claim.

Here, that would have required Caudill to recognize that the literacy determination would become

material to a new SSI claim after he turned 50, and to appeal the ALJ’s 2001 decision of “not

disabled” on the grounds that the ALJ’s determination of his literacy, which had no effect on the

outcome of the claim, was in error. This would require the court to devote energy to an issue having

no actual bearing on the outcome of the claim. This standard would impose a burden on claimants,

ALJs, and federal courts.


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09-6473, Caudill v. Comm’r of Soc. Sec.

        Applying traditional collateral estoppel rules, I would find that reconsideration of the issue

of Caudill’s literacy is not precluded. Caudill urges this court to distinguish Drummond on the basis

that the determination of Caudill’s literacy level was not essential to the 2001 determination of ALJ

Francis, and thus that res judicata and collateral estoppel do not apply. It is true, as the majority

points out, that in Drummond the first ALJ’s determination of the claimant’s residual functional

capability — that she had a RFC for sedentary work rather than medium-level work — was not

essential to the judgment insofar as either RFC determination would have resulted in a finding of

“not disabled” at the time of the first decision. Likewise, here the first ALJ’s determination of

Caudill’s literacy level — that he had limited education rather than illiteracy — was immaterial to

the judgment because both findings would have resulted in a finding that he was not disabled as long

as he was classified as a “younger individual.” Yet Drummond did not discuss or consider

application of the traditional collateral-estoppel test. I would do so here.

        For issue preclusion to apply, the resolution of the issue must have been “necessary and

essential to a judgment on the merits in the prior litigation.” Hammer, 195 F.3d at 840; see also

Bobby v. Bies, 129 S. Ct. 2145, 2152 (2009). “If a judgment does not depend on a given

determination, relitigation of that determination is not precluded.” Bobby, 129 S. Ct. at 2152. To

determine whether an issue was essential to the prior judgment, “[t]he appropriate question . . . is

whether the issue was actually recognized by the parties as important and by the trier as necessary

to the first judgment. If so, the determination is conclusive between the parties in a subsequent

action . . . .” Restatement (Second) of Judgments § 27, cmt. j (1982).




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09-6473, Caudill v. Comm’r of Soc. Sec.

        I would find that the issue of Caudill’s literacy was not recognized by the parties or the ALJ

as important or essential to the 2001 judgment. Although the 2001 decision referenced Caudill’s

educational history and the results of a test indicating that he reads at a second-grade level, and then

found that he has a “limited education,” that issue was not essential to the ultimate determination that

Caudill had a “residual functional capacity to perform a restricted range of light work” and was

therefore not disabled. (See 2001 Decision, at Tr. 87, 90, 92.) The vast majority of discussion in the

2001 decision concerned Caudill’s physical impairments. (See id., at Tr. 84-90.) A lesser portion

of the decision discussed Caudill’s intellectual functioning and IQ score, but that discussion did not

focus in any meaningful way on his literacy level. (Id., at Tr. 87-88.) Because Caudill would have

been deemed not disabled regardless of whether he was found illiterate, the finding that he had a

“limited education” was not essential to the judgment. Cf. Rogers, 255 F.3d 659, 2000 WL 799332,

at *5 (“A finding that an applicant's skills were not transferable is not essential to a judgment

denying benefits to that applicant.”).

        Further, Caudill lacked an incentive to litigate the issue of literacy in the initial proceeding.

For collateral estoppel to apply, the “party to be estopped [must have] had a full and fair opportunity

to litigate the issue.” Hammer, 195 F.3d at 840. Such opportunity is lacking “where the opposing

party ‘ha[d] little incentive to defend vigorously’ in the first action.” Kosinski v. C.I.R. , 541 F.3d

671, 677 (6th Cir. 2008) (quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322, 330-31 (1979))

(alteration in original). Because the issue of Caudill’s literacy was immaterial to the outcome of his

claim, he had no incentive to contest the ALJ’s finding that he had “limited education” or to argue

that the test showing him to have a second-grade reading level demonstrated functional illiteracy.


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09-6473, Caudill v. Comm’r of Soc. Sec.

        For these reasons, I do not believe Drummond controls the relevant issue in this case. I

would hold that ALJ Reynolds erred in determining that he was compelled by Drummond to adopt

the findings of ALJ Francis regarding Caudill’s literacy in the absence of new additional evidence

or a change in Caudill’s circumstances. Because ALJ Reynolds merely adopted the findings of ALJ

Francis, remand is appropriate for ALJ Reynolds to make his own determination as to Caudill’s

literacy. Although there is evidence that supports both a finding of illiteracy (Caudill’s second-grade

reading level, developmental reading disability, and testimony about his difficulty reading), and

limited education (Caudill’s school attendance through eleventh grade, admission that he has some

ability to read, and past work history), the ALJ should independently weigh this evidence and make

a determination based on it before this Court assesses the determination under the substantial

evidence standard. I do not disagree with the majority that substantial evidence could be found on

this record to support a finding of “limited education.” But in order to defer to an ALJ’s

determination under the substantial-evidence standard, the ALJ must make his or her own

determination of Caudill’s literacy level based on the evidence.




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