                     FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT


 JEFFREY MEIER,                                    No. 11-35736
                      Plaintiff-Appellant,
                                                     D.C. No.
                     v.                           4:09-cv-00031-
                                                       SEH
 CAROLYN W. COLVIN ,
 Commissioner of Social Security,
               Defendant-Appellee.                   OPINION


          Appeal from the United States District Court
                  for the District of Montana
           Sam E. Haddon, District Judge, Presiding

                  Submitted August 10, 2012*

                       Filed July 23, 2013

      Before: William A. Fletcher and Raymond C. Fisher,
      Circuit Judges, and James P. Jones, District Judge.**

                    Opinion by Judge Fisher



  *
    The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

 **
    The Honorable James P. Jones, United States District Judge for the
W estern District of Virginia, sitting by designation.
2                         MEIER V . COLVIN

                           SUMMARY***


       Equal Access to Justice Act / Attorneys’ Fees

    The panel reversed the district court’s order denying a
plaintiff’s motion for attorneys’ fees and costs under the
Equal Access to Justice Act, and it remanded for an award of
fees and costs.

    The panel held that the position of the United States was
not substantially justified in this case concerning the
plaintiff’s application for social security disability benefits.
The panel stated that the “position of the United States”
includes both the government’s litigation position and the
underlying agency action giving rise to the civil action. The
panel held that in the social security context, the court treats
the decision of the administrative law judge as the underlying
agency action.


                             COUNSEL

John E. Seidlitz, Jr., Seidlitz Law Office, Great Falls,
Montana, for Plaintiff-Appellant.

Michael C. Cotter, United States Attorney, George F.
Darragh, Jr., Assistant United States Attorney, Great Falls,
Montana; Dorrelyn K. Dietrich, Special Assistant United
States Attorney, Social Security Administration, Office of the
General Counsel, Denver, Colorado; John Jay Lee, Regional

  ***
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                     MEIER V . COLVIN                       3

Chief Counsel, Region VIII, Social Security Administration,
Office of the General Counsel, Denver, Colorado, for
Defendant-Appellee.


                         OPINION

FISHER, Circuit Judge:

    Jeffrey Meier appeals the district court’s order denying
his motion for attorney’s fees and costs under the Equal
Access to Justice Act. We hold that the position of the
United States was not substantially justified. We therefore
reverse and remand for an award of fees and costs.

                     BACKGROUND

    Meier applied for social security disability benefits. The
administrative law judge (ALJ) denied benefits and the
district court affirmed. We reversed and remanded for an
award of benefits in an unpublished memorandum
disposition, holding that the ALJ (1) failed to offer specific
and legitimate reasons, supported by substantial evidence, for
rejecting treating physician Dr. Mel Margaris’ opinion that
Meier was incapable of working, and (2) failed to offer clear
and convincing reasons, supported by substantial evidence,
for discounting Meier’s subjective pain testimony. See Meier
v. Astrue, 404 F. App’x 150 (9th Cir. 2010).

    Meier moved for an award of $14,856.55 in attorney’s
fees and $805 in costs under the Equal Access to Justice Act
(EAJA), 28 U.S.C. § 2412(d). The district court denied the
motion, offering only this brief explanation for the denial of
fees:
4                     MEIER V . COLVIN

        No less than 6 separate rulings were issued
        denying benefits before the Ninth Circuit
        Court of Appeals ordered benefits be paid.
        The position of the government in opposing
        the petition for benefits was substantially
        justified.

On appeal, Meier argues that the district court abused its
discretion by denying EAJA fees. We agree.

                STANDARD OF REVIEW

    We review the district court’s denial of attorney’s fees
under EAJA for an abuse of discretion. See Sampson v.
Chater, 103 F.3d 918, 921 (9th Cir. 1996). A district court
abuses its discretion when it fails to apply the correct legal
rule or its application of the correct legal rule is illogical,
implausible or without support in inferences that may be
drawn from the facts in the record. See United States v.
Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc).

                        DISCUSSION

                               I.

    EAJA provides that “a court shall award to a prevailing
party other than the United States fees and other expenses . . .
incurred by that party in any civil action . . . unless the court
finds that the position of the United States was substantially
justified or that special circumstances make an award unjust.”
                           MEIER V . COLVIN                           5

28 U.S.C. § 2412(d)(1)(A).1 It is the government’s burden to
show that its position was substantially justified. See
Gutierrez v. Barnhart, 274 F.3d 1255, 1258 (9th Cir. 2001).
Substantial justification means “justified in substance or in
the main – that is, justified to a degree that could satisfy a
reasonable person.” Pierce v. Underwood, 487 U.S. 552, 565
(1988) (internal quotation marks omitted). Put differently,
the government’s position must have a “reasonable basis both
in law and fact.” Id.

    The “position of the United States” includes both the
government’s litigation position and the underlying agency
action giving rise to the civil action. See, e.g., Hardisty v.
Astrue, 592 F.3d 1072, 1077 (9th Cir. 2010); Al-Harbi v. INS,
284 F.3d 1080, 1084 (9th Cir. 2002) (order); Kali v. Bowen,
854 F.2d 329, 332 (9th Cir. 1988). As EAJA provides,
“‘position of the United States’ means, in addition to the
position taken by the United States in the civil action, the
action or failure to act by the agency upon which the civil



 1
     In full, § 2412(d)(1)(A) provides:

          Except as otherwise specifically provided by statute, a
          court shall award to a prevailing party other than the
          United States fees and other expenses, in addition to
          any costs awarded pursuant to subsection (a), incurred
          by that party in any civil action (other than cases
          sounding in tort), including proceedings for judicial
          review of agency action, brought by or against the
          United States in any court having jurisdiction of that
          action, unless the court finds that the position of the
          United States was substantially justified or that special
          circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A).
6                     MEIER V . COLVIN

action is based.” 28 U.S.C. § 2412(d)(2)(D) (emphasis
added).

    In the social security context, we have consistently treated
the ALJ’s decision as the “action or failure to act by the
agency upon which the civil action is based,” but we have
never explained why this is the case. See, e.g., Hardisty,
592 F.3d at 1077; Gutierrez, 274 F.3d at 1259. In this
opinion, we explain the rationale for our longstanding
practice.

    Treating the ALJ’s decision as the underlying agency
action may, at first glance, seem unwarranted. In determining
whether fees should be awarded, we would most naturally
begin by focusing on the behavior of the government when it
acted as a litigator and when it acted as a party whose action
or inaction is challenged in the suit. It is less obvious that we
should evaluate (and disapprove by the award of fees) the
behavior of the government when it acted as an adjudicator.

    That view does not bear scrutiny, however. First,
disregarding the government’s conduct as adjudicator runs
counter to the EAJA’s plain language. In the typical social
security case, the civil complaint alleges procedural and
substantive errors by the ALJ. The ALJ’s decision, therefore,
is directly and literally “the action or failure to act by the
agency upon which the civil action is based.” 28 U.S.C.
§ 2412(d)(2)(D). EAJA’s plain language thus directs courts
to focus on the ALJ’s decision.

    Second, in the typical case the ALJ’s decision represents
not only the government’s position as adjudicator but also its
position as a party. When an ALJ denies an application for
social security benefits, the claimant has the option of
                      MEIER V . COLVIN                        7

appealing that decision to the Appeals Council. See 20
C.F.R. § 404.967. If the Appeals Council denies review, the
ALJ’s decision becomes the final decision of the
Commissioner of Social Security. See 20 C.F.R. § 404.981;
Shafer v. Astrue, 518 F.3d 1067, 1068-69 (9th Cir. 2008)
(“The Social Security Administration’s Appeals Council
denied Shafer’s request for review of the ALJ’s decision,
leaving the ALJ’s decision to stand as the final decision of the
Commissioner.”); cf. Taylor v. Heckler, 835 F.2d 1037, 1043
n.14 (3d Cir. 1987) (“In this case, the Secretary adopted in
total, and defended in the district court, the ALJ’s evaluation
of Taylor’s disability claim. The ALJ’s determination that
Taylor was not disabled thus became the government’s
underlying position, one of the two positions of the United
States that must be substantially justified if this appeal is to
fall within EAJA’s exception.”). That is precisely what
occurred in this case: the Appeals Council denied Meier’s
request for review, making “the Administrative Law Judge’s
decision . . . the final decision of the Commissioner of Social
Security in [Meier’s] case.” Notice of Appeals Council
Action. Thus, even if it were inappropriate to consider the
government’s position as adjudicator, we would still review
the ALJ’s decision because it constitutes not only an
adjudication but also the Commissioner’s final decision
denying benefits.

    Finally, even if the ALJ’s decision represented only an
adjudication and not also the position of the Commissioner,
it would still be proper to consider it. EAJA refers to the
government’s “position” and to the “action or failure to act by
the agency,” making no distinction between an agency’s
adjudicative and adversarial acts. 28 U.S.C. § 2412(d)(1)(A),
(d)(2)(D). The statute thus covers both types of government
conduct, as we previously made clear in the analogous
8                     MEIER V . COLVIN

immigration context in Thangaraja v. Gonzales, 428 F.3d
870, 873–74 (9th Cir. 2005).

    In Thangaraja, the government argued that decisions by
the Board of Immigration Appeals (BIA) and immigration
judge (IJ) were irrelevant to the EAJA analysis and that the
only position that mattered was the Department of Homeland
Security’s (DHS) defense of the BIA’s and IJ’s decisions
before this court. See id. at 873. We rejected that argument,
holding that “the ‘position of the United States’ as defined by
EAJA encompasses both the DHS’s litigation position and the
underlying agency decision rendered by the BIA or an IJ.”
Id. at 874. We said:

       Pursuant to EAJA, the BIA and IJ decisions
       we review are as much the “position of the
       United States” as is the DHS’s litigation
       position. The IJ’s decision in this case,
       summarily affirmed without opinion by the
       BIA, is “the action . . . by the agency upon
       which the civil action is based,” which the
       statute requires us to consider in determining
       whether the “position of the United States”
       was substantially justified.

           Moreover, the DHS’s analogy to judicial
       proceedings is misplaced. Both the Executive
       Office for Immigration Review (EOIR), to
       which the BIA and the Immigration Court
       belong, and the DHS are part of the executive
       branch of the United States government,
       despite their mutual independence.
                     MEIER V . COLVIN                       9

Id. at 873–74 (alteration in original) (citations omitted).
Thus, even if the ALJ’s decision were purely adjudicative, it
would nonetheless qualify as the position of the United States
for purposes of EAJA’s substantial justification inquiry.

    For each of these reasons, we properly look to decisions
of the ALJ to determine whether the government’s position
in the underlying agency action was substantially justified.

                             II.

   Applying the substantial justification test here, we first
consider the underlying agency action, which, for the reasons
we have just explained, is the decision of the ALJ. We then
consider the government’s litigation position.

             A. Underlying Agency Conduct

    In our memorandum disposition, we held that the ALJ’s
decision was not supported by substantial evidence. See
Meier, 404 F. App’x at 151–52. Specifically, the ALJ failed
to offer specific and legitimate reasons, supported by
substantial evidence, for rejecting Dr. Margaris’ opinion that
Meier was incapable of working. See Lester v. Chater,
81 F.3d 821, 830 (9th Cir. 1995). We further held that the
ALJ failed to offer clear and convincing reasons, supported
by substantial evidence, for discounting Meier’s subjective
pain testimony. See Carmickle v. Comm’r Soc. Sec. Admin.,
533 F.3d 1155, 1160 (9th Cir. 2008). We accordingly
remanded for an award of benefits. In reaching these
conclusions, we applied the deferential substantial evidence
standard of review. Under this standard, “‘[s]ubstantial
evidence’ means . . . such relevant evidence as a reasonable
person might accept as adequate to support a conclusion.”
10                    MEIER V . COLVIN

Lingenfelter v. Astrue, 504 F.3d 1028, 1035 (9th Cir. 2007).
Given the significant similarity between this standard and the
substantial justification standard – “justified to a degree that
could satisfy a reasonable person,” Pierce, 487 U.S. at 565 –
this court and other circuits have held that a “holding that the
agency’s decision . . . was unsupported by substantial
evidence is . . . a strong indication that the ‘position of the
United States’ . . . was not substantially justified.”
Thangaraja, 428 F.3d at 874; see also id. (“[I]t will be only
a ‘decidedly unusual case in which there is substantial
justification under the EAJA even though the agency’s
decision was reversed as lacking in reasonable, substantial
and probative evidence in the record.’” (quoting Al-Harbi,
284 F.3d at 1085)); Hadden v. Bowen, 851 F.2d 1266, 1269
(10th Cir. 1988) (holding that “a lack of substantial evidence
indicates, but does not conclusively establish, that the
government’s position concerning a claim was not
substantially justified”). For this reason, and for the reasons
stated in our memorandum disposition on the merits, we hold
that the government’s underlying action was not substantially
justified in this case.

                   B. Litigation Position

    Because the government’s underlying position was not
substantially justified, we need not address whether the
government’s litigation position was justified. See Shafer,
518 F.3d at 1071 (“The government’s position must be
substantially justified at each stage of the proceedings.”
(quoting Corbin v. Apfel, 149 F.3d 1051, 1052 (9th Cir.
1998)) (internal quotation marks omitted)); Li v. Keisler,
505 F.3d 913, 918 (9th Cir. 2007) (order) (“[T]he government
must show that all of these positions were substantially
justified in order to avoid an award of EAJA fees.”); cf.
                      MEIER V . COLVIN                       11

Commissioner, INS v. Jean, 496 U.S. 154, 159 n.7 (1990)
(“[T]he amendment will make clear that the Congressional
intent is to provide for attorney fees when an unjustifiable
agency action forces litigation, and the agency then tries to
avoid such liability by reasonable behavior during the
litigation[.]” (first alteration in original) (quoting H.R. Rep.
No. 98-992, pp. 9, 13 (1984))). Even if we were to reach the
issue, we would conclude that the government’s litigation
position – defending the ALJ’s errors on appeal – lacked the
requisite justification. See Sampson, 103 F.3d at 922 (“It is
difficult to imagine any circumstance in which the
government’s decision to defend its actions in court would be
substantially justified, but the underlying administrative
decision would not.” (quoting Flores v. Shalala, 49 F.3d 562,
570 n.11 (9th Cir. 1995)) (internal quotation marks omitted).
Although the government proffers a lengthy defense of the
ALJ’s decision, it largely reiterates arguments that we
rejected in the previous appeal. Given the serious flaws in the
ALJ’s analysis, we are not persuaded that the government
reasonably chose to defend the ALJ’s decision in this action.

    The district court concluded that the government’s
position was substantially justified because the government
prevailed at the administrative and district court levels before
losing in this court. Although it was proper for the district
court to consider the government’s success in the district
court as part of the EAJA analysis, see Lewis v. Barnhart,
281 F.3d 1081, 1084 (9th Cir. 2002), the court erred by
considering the government’s success at the administrative
level. The ALJ’s decision was not supported by substantial
evidence. That the ALJ agreed with the government,
therefore, does not support the conclusion that the
government’s position was substantially justified.
12                    MEIER V . COLVIN

                      CONCLUSION

     The order of the district court denying Meier’s motion for
attorney’s fees and costs under EAJA is reversed. The case
is remanded for an award of fees and costs.

     REVERSED AND REMANDED.
