(SS)Martinez v. Commissioner of Social Security ( 2021 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 STEVEN ANTHONY MARTINEZ, Case No. 1:14-cv-00578-SKO 8 Plaintiff, ORDER GRANTING PLAINTIFF’S 9 v. COUNSEL’S MOTION FOR ATTORNEY’S FEES PURSUANT TO 10 ANDREW SAUL, 42 U.S.C. § 1383 Acting Commissioner of Social Security1, 11 (Doc. 23) Defendant. 12 I. INTRODUCTION 13 14 On January 5, 2021, Young Cho (“Counsel”), counsel for Plaintiff Steven Anthony Martinez 15 (“Plaintiff”), filed a motion for an award of attorney’s fees pursuant to 42 U.S.C. § 1383(d)(2)(B). 16 (Doc. 23.) On January 6, 2021, the Court issued a minute order requiring Plaintiff and the 17 Commissioner to file a response in opposition or statement of non-opposition to Counsel’s motion, 18 if any, by no later than February 1, 2021. (Doc. 24.) On February 1, 2021, the Commissioner filed 19 a response in his role “resembling that of a trustee” for Plaintiff, acknowledging that he was not a 20 party to the contingent-fee agreement between Plaintiff and Counsel and therefore “not in a position 21 to either assent or object to the [] fees that Counsel seeks from Plaintiff’s past-due benefits,” but 22 nevertheless taking “no position on the reasonableness of the request.” (See Doc. 27 at 2, 5.) The 23 Commissioner does object, however, to Counsel’s request that the Court award a “net fee.” (Id. at 24 5.) Plaintiff did not file an opposition to the motion by the deadline. 25 For the reasons set forth below, Counsel’s motion for an award of attorney’s fees is granted 26 1 On June 17, 2019, Andrew Saul became the Commissioner of the Social Security Administration. See 27 https://www.ssa.gov/agency/commissioner.html (last visited by the court on August 26, 2019). He is therefore substituted as the defendant in this action. See 42 U.S.C. § 405(g) (referring to the “Commissioner’s Answer”); 20 28 C.F.R. § 422.210(d) (“the person holding the Office of the Commissioner shall, in his official capacity, be the proper 1 in the amount of $14,000.00, subject to an offset of $3,500.00 in fees already awarded pursuant to 2 the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), on November 9, 2015 (see Doc. 3 22). 4 II. BACKGROUND 5 Plaintiff brought the underlying action seeking judicial review of a final administrative 6 decision denying his claim for Supplemental Security Income (SSI) under Title XVI of the Social 7 Security Act. (Doc. 1.) The Court reversed the Commissioner’s denial of benefits and remanded 8 the case to the agency for further proceedings. (Doc. 19.) Judgment was entered in favor of Plaintiff 9 and against the Commissioner on August 5, 2015. (Doc. 20.) On November 3, 2015, the parties 10 stipulated to an award of $3,500.00 in attorney fees under the EAJA, which was entered on 11 November 9, 2015. (Docs. 21 & 22.) 12 On remand, the Commissioner found Plaintiff disabled as of July 23, 2010. (See Doc. 23-2 13 at 8.) On December 8, 2020, the Commissioner issued a letter to Plaintiff approving his claim for 14 benefits and awarding him $92,560.04 in back payments beginning August 2010, 25% of which 15 equals $23,140.01. (See Doc. 23 at 3; Doc. 23-3 at 1.) On January 5, 2021, Counsel filed a motion 16 for attorney’s fees pursuant to 42 U.S.C. § 1383(d)(2)(B) in the amount of $14,000.00, equal to 17 15.1% of Plaintiff’s back benefits. (Doc. 23 at 4–5.) Counsel further requests that the Court 18 “account” for the $3,500.00 EAJA fees already awarded, and “certify” a “net fee” of $10,500.00. 19 (Id. at 7–10.) It is Counsel’s motion for attorney’s fees that is currently pending before the Court. 20 In his response, the Commissioner takes “no position on the reasonableness of the [fee] request,” 21 yet does object to Counsel’s request that the Court award a “net fee.” (Doc. 27 at 2, 5.) 22 III. DISCUSSION 23 Pursuant to 42 U.S.C. § 1383(d) (“Section 1383”), an attorney may seek an award of 24 attorney’s fees for work performed in a Social Security case where the claimant is awarded SSI 25 benefits under Title XVI. In relevant part, Section 1383 provides as follows: 26 [I]f the claimant is determined to be entitled to past-due benefits under this 27 subchapter and the person representing the claimant is an attorney, the Commissioner of Social Security shall pay out of such past-due benefits to such attorney an amount 28 equal to the lesser of-- 1 (i) so much of the maximum fee as does not exceed 25 percent of such past-due 2 benefits (as determined before any applicable reduction under subsection (g) and reduced by the amount of any reduction in benefits under this subchapter or 3 subchapter II pursuant to section 1320a-6(a) of this title), or 4 (ii) the amount of past-due benefits available after any applicable reductions . . . . 5 42 U.S.C. § 1383(d)(2)(B). In addition, “[t]he provisions of section 406 . . . shall apply to this part 6 to the same extent as they apply in the case of subchapter II [of this chapter].” 42 U.S.C. 7 § 1383(d)(2)(A); see also Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002) (Section 406(b) controls 8 fees awarded for representation of Social Security claimants). 9 “In contrast to fees awarded under fee-shifting provisions such as 42 U.S.C. § 1988, the fee 10 is paid by the claimant out of the past-due benefits awarded; the losing party is not responsible for 11 payment.” Crawford v. Astrue, 586 F.3d 1142, 1147 (9th Cir. 2009) (en banc) (citing Gisbrecht, 12 535 U.S. at 802). The Commissioner has standing to challenge the award, despite that the Section 13 406(b) attorney’s fee award is not paid by the government. Craig v. Sec’y Dep’t of Health & Human 14 Servs., 864 F.2d 324, 328 (4th Cir. 1989), abrogated on other grounds in Gisbrecht, 535 U.S. at 15 807. The goal of fee awards under Section 406(b) is to provide adequate incentive to represent 16 claimants while ensuring that the usually meager disability benefits received are not greatly 17 depleted. Cotter v. Bowen, 879 F.2d 359, 365 (8th Cir. 1989), abrogated on other grounds in 18 Gisbrecht, 535 U.S. at 807.1 19 The 25% maximum fee is not an automatic entitlement, and courts are required to ensure 20 that the requested fee is reasonable. Gisbrecht, 535 U.S. at 808–09 (Section 406(b) does not displace 21 contingent-fee agreements within the statutory ceiling; instead, Section 406(b) instructs courts to 22 review for reasonableness fees yielded by those agreements). “Within the 25 percent boundary . . . 23 the attorney for the successful claimant must show that the fee sought is reasonable for the services 24 rendered.” Id. at 807; see also Crawford, 586 F.3d at 1148 (holding that Section 406(b) “does not 25 specify how courts should determine whether a requested fee is reasonable” but “provides only that 26 the fee must not exceed 25% of the past-due benefits awarded”). 27 Generally, “a district court charged with determining a reasonable fee award under 28 § 406(b)(1)(A) must respect ‘the primacy of lawful attorney-client fee arrangements,’ . . . ‘looking 1 first to the contingent-fee agreement, then testing it for reasonableness.’” Crawford, 586 F.3d at 2 1148 (quoting Gisbrecht, 535 U.S. at 793, 808). The United States Supreme Court has identified 3 several factors that may be considered in determining whether a fee award under a contingent-fee 4 agreement is unreasonable and therefore subject to reduction by the court: (1) the character of the 5 representation; (2) the results achieved by the representative; (3) whether the attorney engaged in 6 dilatory conduct in order to increase the accrued amount of past-due benefits; (4) whether the 7 benefits are large in comparison to the amount of time counsel spent on the case; and (5) the 8 attorney’s record of hours worked and counsel’s regular hourly billing charge for non-contingent 9 cases. Id. (citing Gisbrecht, 535 U.S. at 807–08). 10 Here, the fee agreement between Plaintiff and the Law Offices of Lawrence D. Rohlfing, 11 signed by Plaintiff and Counsel, provides: 12 If this matter requires judicial review of any adverse decision of the Social Security Administration, the fee for successful prosecution of this matter is a separate 25% 13 of the past due benefits awarded upon reversal of any unfavorable ALJ decision for work before the court. Attorney shall seek compensation under the 14 [EAJA] and such amount shall credit to the client for fees otherwise payable for 15 court work. 16 (Doc. 23-1 (signed September 24, 2014) (emphasis in original).) 17 The Court has considered the character of Counsel’s representation of Plaintiff and the good 18 results achieved by Counsel, which included an award of benefits. Counsel and his paralegal spent 19 25.6 hours representing Plaintiff, ultimately gaining a favorable decision in that the Commissioner’s 20 decision was reversed and remanded to the agency for reconsideration. (Doc. 23-4 (time sheets 21 accounting for 21.3 attorney hours and 4.3 paralegal hours spent representing Plaintiff before this 22 Court).) There is no indication that a reduction of the award is warranted due to any substandard 23 performance by Counsel as Counsel secured a successful result for Plaintiff. There is also no 24 evidence that counsel engaged in any dilatory conduct resulting in delay. 25 Although the accepted range in the Fresno Division for attorneys like Counsel with over 26 twenty years of experience (see Doc. 23 at 11; Doc. 23-5) is between $250 and $380 per hour in 27 non-contingency cases, see Silvester v. Harris, No. 1:11–CV–2137 AWI SAB, 2014 WL 7239371 28 at *4 (E.D. Cal. Dec. 17, 2014), here the effective hourly (blended) rate requested equals $546.88 1 per hour. This hourly rate is not excessive when compared to what the Ninth Circuit has approved 2 in cases involving social security contingency fee arrangements. See Crawford, 586 F.3d 1142, 3 1153 (9th Cir. 2009) (explaining that the majority opinion found reasonable effective hourly rates 4 equaling $519, $875, and $902) (J. Clifton, concurring in part and dissenting in part); see also 5 Thomas v. Colvin, No. 1:11−cv−01291−SKO, 2015 WL 1529331, at *2−3 (E.D. Cal. Apr. 3, 2015) 6 (upholding an effective hourly rate of $1,093.22 for 40.8 hours of work); Jamieson v. Astrue, No. 7 1:09CV0490 LJO DLB, 2011 WL 587096, at *2 (E.D. Cal. Feb. 9, 2011) (upholding an effective 8 hourly rate of $1,169.49 for 29.5 hours of work); Palos v. Colvin, No. CV 15−04261−DTB, 2016 9 WL 5110243, at *2 (C.D. Cal. Sept. 20, 2016) (upholding an effective hourly rate of $1,546.39 for 10 9.7 hours of work); Villa v. Astrue, No. CIV−S−06−0846 GGH, 2010 WL 118454, at *1−2 (E.D. 11 Cal. Jan. 7, 2010) (approving Section 406(b) fees exceeding $1,000 per hour for 10.4 hours of work, 12 and noting that “[r]educing § 406(b) fees after Crawford is a dicey business”). Further, attorney’s 13 fees in the amount of $14,000.00 do not exceed and are in fact less than 25% of the past-due benefits 14 awarded and are not excessive in relation to the past-due award.2 See generally Ortega v. Comm’r 15 of Soc. Sec., No. 1:12–cv–01030–AWI–SAB, 2015 WL 5021646, at *3 (E.D. Cal. Aug. 21, 2015) 16 (granting petition for an award of attorney’s fees pursuant to Section 406(b) in the amount of 17 $24,350.00); Thomas, 2015 WL 1529331, at *3 (granting petition for an award of attorney’s fees 18 pursuant to Section 406(b) in the amount of $44,603.50); Boyle v. Colvin, No. 1:12–cv–00954– 19 SMS, 2013 WL 6712552, at *2 (E.D. Cal. Dec. 19, 2013) (granting petition for an award of 20 attorney’s fees pursuant to Section 406(b) in the amount of $20,577.57); Jamieson, 2011 WL 21 587096, at *2 (recommending an award of attorney’s fees pursuant to Section 406(b) in the amount 22 23 2 As noted above, 25% of past due benefits withheld totals $23,140.01. Counsel states in his motion that he “has been advised by administrative counsel that she will seek [this entire amount] in attorney’s fees” under Section 1383(d)(2)(A), 24 which covers work in administrative proceedings, and that he will “correspond with administrative counsel, and then will apply a remittitur and/or make other adjustments as appropriate so that [Plaintiff’s] total fee obligation to both 25 attorneys will not exceed the withholding even if it results in counsel in not receiving any fees” under Section 1383(d)(2)(B). (Doc. 23 at 6.) It is therefore conceivable that all the withholding in the present case will be exhausted 26 prior to this Court’s order. The Court’s order shall reflect that any award of fees under Section 1383(d)(2)(B) are to be paid by the Commissioner only to the extent that the withheld 25% of Plaintiff’s past due benefits is available and 27 unexhausted. See Culbertson v. Berryhill, 139 S. Ct. 517, 523 (2019) (noting that the agency has a discretionary policy of withholding “only one pool of 25% of past-due benefits” to pay attorney fees under both § 406(a) and § 406(b), and 28 thus the Commissioner’s direct payment of fees to the attorney out of the past-due benefits “could be less than the fees 1 of $34,500). 2 In making this determination, the Court recognizes the contingent-fee nature of this case and 3 Counsel’s assumption of risk in agreeing to represent Plaintiff under such terms. “District courts 4 generally have been deferential to the terms of contingency fee contracts in § 406(b) cases.” Hearn 5 v. Barnhart, 262 F. Supp. 2d 1033, 1037 (N.D. Cal. 2003) (“Because attorneys like Mr. Sackett 6 contend with a substantial risk of loss in [Social Security] cases, an effective hourly rate of only 7 $450 in successful cases does not provide a basis for this court to lower the fee to avoid a ‘windfall.’” 8 (quoting Gisbrecht, 535 U.S. at 807)). Attorneys who agree to represent claimants pursuant to a 9 contingent fee agreement assume the risk of receiving no compensation for their time and effort if 10 the action does not succeed. Id. Here, Counsel accepted substantial risk of loss in representing 11 Plaintiff, whose application had already been denied at the administrative level. Plaintiff agreed to 12 the contingent fee. (See Doc. 24-1.) Working efficiently and effectively, Counsel secured a remand, 13 and ultimately, the award of substantial benefits to Plaintiff. (See Docs. 19, 20, 23-3.) 14 An award of attorney’s fees pursuant to Section 1383(d)(2)(B) in the amount of $14,000.00 15 is, therefore, appropriate. The Court, however, declines to “[o]rder[] the Commissioner to pay the 16 net fee [of $10,500] and then remit any excess withholding directly to [Plaintiff] as past due SSI 17 benefits.” (See Doc. 23 at 10.) It is well established that “[a]n attorney must refund to the client 18 EAJA fees received when the § 1383(d) award exceeds the EAJA fees.” Tapia v. Berryhill, No. ED 19 CV 17-0027-RAO, 2019 WL 1723136, at *2 (C.D. Cal. Feb. 8, 2019) (citing Gisbrecht, 535 U.S. 20 at 796) (emphasis added). 21 As Counsel acknowledges, the undersigned recently declined to certify the payment of net 22 fees. See Her v. Saul, No. 1:18-cv-01218-SKO, 2020 WL 5702133, at *4 (E.D. Cal. Sept. 24, 2020). 23 Counsel cites to other cases from this Court that have ordered net fee awards, but they either do not 24 involve Section 1383 petitions (which, according to Counsel, differ in that “a claimant is not 25 adversely affected by the receipt of the EAJA reimbursement regarding potential excess resources, 26 see Doc. 23 at 9)3 or, in the case of Aguilar v. Comm’r of Soc. Sec., No. 1:17-cv-01482-SAB, 2019 27 3 See Arias v. Comm’r of Soc. Sec., No. 2:18-CV-02791-KJN, 2020 WL 4923617 (E.D. Cal. Aug. 21, 2020); Herman 28 v. Comm’r of Soc. Sec., No. 1:15-cv-00456-AWI-SAB, 2018 WL 6078309 (E.D. Cal. Nov. 21, 2018), report and 1 WL 6211280, at *3 (E.D. Cal. Nov. 21, 2019), ordered a net fee without addressing its propriety 2 under Section 1383 given the language of the EAJA. Counsel also cites Culbertson, but there the 3 issue presented was “whether § 406(b)’s 25% cap limits the aggregate fees awarded for 4 representation before both the agency under § 406(a) and the court under § 406(b), or instead limits 5 only the fee awarded for court representation under § 406(b).” 139 S. Ct. 517, 521 (2019). Payment 6 by the Commissioner of attorney’s fees to Counsel in an amount that is net of the EAJA payments 7 was not at issue in Culbertson. 8 Finally, Counsel, in his “Notice of New Authority,” points the Court to the recent case 9 O’Donnell v. Saul, 983 F.3d 950 (7th Cir. 2020). (See Doc. 26.) As an out-of-circuit case, 10 O’Donnell is not binding on this Court. In any event, O’Donnell lends support to the undersigned’s 11 approach of declining to certify a net fee award in light of the statutory language, relied on in 12 Gisbrecht, that anticipates a refund from attorney to the client. See id. at 957, 959 (finding the 13 magistrate judge did not abuse her discretion in rejecting the “netting method” and agreeing with 14 the Tenth Circuit’s “recognition that even if the netting method is permissible under § 406(b)(1), it 15 is ‘disfavor[ed]” in light of the [EAJA’s] language that anticipates an attorney-to-claimant refund.’”) 16 (quoting Martinez v. Berryhill, 699 F. App’x 775, 776 (10th Cir. 2017)). 17 Counsel’s request for the certification of a net fee is therefore denied. See Her, 2020 WL 18 5702133, at *4. See also Barrera Aguilar v. Saul, No. CV 16-7565 SS, 2019 WL 6175021, at *2 19 (C.D. Cal. Sept. 16, 2019) (declining to order the Commissioner to certify payment of net fee to the 20 plaintiff’s counsel). As Plaintiff was previously awarded $3,500.00 in fees pursuant to the EAJA, 21 Counsel shall refund this amount to Plaintiff. 22 IV. CONCLUSION AND ORDER 23 For the reasons stated above, the Court concludes that the fees sought by Counsel pursuant 24 to Section 1383(d)(2)(B) are reasonable. Accordingly, IT IS ORDERED that: 25 1. Counsel’s motion for an award of attorney’s fees pursuant to 42 U.S.C. § 26 1383(d)(2)(B) in the amount of $14,000.00 (Doc. 23) is granted. Such fees are to be paid by the 27 28 of Soc. Sec., No. 1:16-cv-00196-SAB, 2018 WL 4042862 (E.D. Cal. Aug. 23, 2018); Acosta v. Berryhill, No. 1:14-cv- 1 Commissioner only to the extent that the withheld amount of 25% of Plaintiff’s past due benefits is 2 available and unexhausted; 3 2. Counsel shall refund to Plaintiff $3,500.00 of the Section 1383(d)(2)(B) fees 4 awarded as an offset for the EAJA fees previously awarded pursuant to 28 U.S.C. § 2412(d) (Doc. 5 22); and 6 3. Counsel for Plaintiff shall file on the Court’s docket proof of service of this order 7 upon Plaintiff at his current or last known address. 8 IT IS SO ORDERED. 9 Sheila K. Oberto 10 Dated: February 12, 2021 /s/ . UNITED STATES MAGISTRATE JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28