(SS) Telly v. Commissioner of Social Security ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 GILBERT JOHN TELLY, Case No. 1:19-cv-00456-SKO 12 Plaintiff, ORDER GRANTING PLAINTIFF’S 13 COUNSEL’S MOTION FOR v. ATTORNEY’S FEES PURSUANT TO 14 KILOLO KIJAKAZI, 42 U.S.C. § 406(b) Acting Commissioner of Social Security,1 15 (Doc. 28) Defendant. / 16 I. INTRODUCTION 17 18 On February 18, 2022, Jonathan O. Pena (“Counsel”), counsel for Plaintiff Gilbert John 19 Telly (“Plaintiff”), filed a motion for an award of attorney’s fees pursuant to 42 U.S.C. § 406(b) 20 (“section 406(b)”). (Doc. 28.) On February 22, 2022, the Court issued a minute order requiring 21 Plaintiff and the Acting Commissioner to file their responses in opposition or statements of non- 22 opposition to Counsel’s motion, if any, by no later than March 22, 2022. (Doc. 30.) Plaintiff and 23 the Acting Commissioner were served with copies of the motion for attorney’s fees and the minute 24 order. (Docs. 30, 31.) 25 On March 14, 2022, the Acting Commissioner filed a response, acknowledging that they 26 27 1 On July 9, 2021, Kilolo Kijakazi was named Acting Commissioner of the Social Security Administration. See https://www.ssa.gov/history/commissioners.html. She is therefore substituted as the defendant in this action. See 42 28 U.S.C. § 405(g) (referring to the “Commissioner’s Answer”); 20 C.F.R. § 422.210(d) (“the person holding the Office 1 were not a party to the contingent-fee agreement between Plaintiff and Counsel and therefore “not 2 in a position to either assent or object to the § 406(b) fees that Counsel seeks from Plaintiff’s past- 3 due benefits,” but nevertheless taking “no position on the reasonableness of the request.” (See Doc. 4 32 at 2, 4.) Plaintiff did not file any objection to the motion by the March 22, 2022, deadline, and 5 no reply brief was filed. (See Docket). 6 For the reasons set forth below, Counsel’s motion for an award of attorney’s fees is granted 7 in the amount of $26,829.60, subject to an offset of $5,742.43 in fees already awarded pursuant to 8 the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), on December 17, 2020 (see Doc. 9 27). II. BACKGROUND 10 11 Plaintiff brought the underlying action seeking judicial review of a final administrative 12 decision denying his claim for disability benefits under the Social Security Act. (Doc. 1.) The Court 13 reversed the Acting Commissioner’s denial of benefits and remanded the case to the agency for 14 further proceedings. (Doc. 24.) Judgment was entered in favor of Plaintiff and against the Acting 15 Commissioner on September 16, 2020. (Doc. 25.) The parties stipulated to an award of $5,742.43 16 in attorney fees under EAJA, which was entered on December 17, 2020. (Docs. 26, 27.) 17 On remand, Plaintiff was found disabled as of January 1, 2013. (See Doc. 28-1 at 3.) On 18 February 9, 2022, the Acting Commissioner issued a letter to Plaintiff approving his claim for 19 Supplemental Security Income (SSI) benefits and awarding him $107,318.40 in back payments 20 beginning February 2013. (See Doc. 28-1 at 3.) On February 18, 2022, Counsel filed a motion for 21 attorney’s fees in the amount of $26,829.60, equal to 25% of Plaintiff’s back benefits, with an offset 22 of $5,742.43 for EAJA fees already awarded. (Doc. 28.) It is Counsel’s motion for attorney’s fees 23 that is currently pending before the Court.2 24 25 2 As noted above, Plaintiff was awarded SSI benefits, thereby implicating 42 U.S.C. § 1383(d) (“section 1383(d)”). Section 1383(d) provides that an attorney may seek an award of attorney’s fees for work performed in a 26 Social Security case where, as here, the claimant is awarded SSI benefits. See 42 U.S.C. § 1383(d)(2)(B). However, the fact that Counsel brought the present motion pursuant to section 406(b), instead of section 1383(d), does not change 27 the foregoing analysis or the Court’s conclusion. See 42 U.S.C. § 1383(d)(2)(A) (“[T]he provisions of section 406 . . . shall apply to this part to the same extent as they apply in the case of subchapter II [of this chapter].”); see also Gisbrecht 28 v. Barnhart, 535 U.S. 789, 794 (2002) (Section 406(b) controls fees awarded for representation of Social Security 1 2 Pursuant to the Social Security Act, attorneys may seek a reasonable fee for cases in which 3 they have successfully represented social security claimants. Section 406(b) provides the following: 4 Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and 5 allow as part of its judgment a reasonable fee for such representation, not in excess 6 of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Commissioner of Social Security may . . . certify 7 the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits . . . . 8 9 42 U.S.C. § 406(b)(1)(A) (emphasis added). “In contrast to fees awarded under fee-shifting 10 provisions such as 42 U.S.C. § 1988, the fee is paid by the claimant out of the past-due benefits 11 awarded; the losing party is not responsible for payment.” Crawford v. Astrue, 586 F.3d 1142, 1147 12 (9th Cir. 2009) (en banc) (citing Gisbrecht v. Barnhart, 535 U.S. 789, 802 (2002)). The Acting 13 Commissioner has standing to challenge the award, despite that the section 406(b) attorney’s fee 14 award is not paid by the government. Craig v. Sec’y Dep’t of Health & Human Servs., 864 F.2d 15 324, 328 (4th Cir. 1989), abrogated on other grounds in Gisbrecht, 535 U.S. at 807. The goal of 16 fee awards under section 406(b) is to provide adequate incentive to represent claimants while 17 ensuring that the usually meager disability benefits received are not greatly depleted. Cotter v. 18 Bowen, 879 F.2d 359, 365 (8th Cir. 1989), abrogated on other grounds in Gisbrecht, 535 U.S. at 19 807.1 20 The 25% maximum fee is not an automatic entitlement, and courts are required to ensure 21 that the requested fee is reasonable. Gisbrecht, 535 U.S. at 808–09 (Section 406(b) does not displace 22 contingent-fee agreements within the statutory ceiling; instead, section 406(b) instructs courts to 23 review for reasonableness fees yielded by those agreements). “Within the 25 percent boundary . . . 24 the attorney for the successful claimant must show that the fee sought is reasonable for the services 25 rendered.” Id. at 807; see also Crawford, 586 F.3d at 1148 (holding that section 406(b) “does not 26 specify how courts should determine whether a requested fee is reasonable” but “provides only that 27 the fee must not exceed 25% of the past-due benefits awarded”). 28 Generally, “a district court charged with determining a reasonable fee award under 1 § 406(b)(1)(A) must respect ‘the primacy of lawful attorney-client fee arrangements,’ . . . ‘looking 2 first to the contingent-fee agreement, then testing it for reasonableness.’” Crawford, 586 F.3d at 3 1148 (quoting Gisbrecht, 535 U.S. at 793, 808). The United States Supreme Court has identified 4 several factors that may be considered in determining whether a fee award under a contingent-fee 5 agreement is unreasonable and therefore subject to reduction by the court: (1) the character of the 6 representation; (2) the results achieved by the representative; (3) whether the attorney engaged in 7 dilatory conduct in order to increase the accrued amount of past-due benefits; (4) whether the 8 benefits are large in comparison to the amount of time counsel spent on the case; and (5) the 9 attorney’s record of hours worked and counsel’s regular hourly billing charge for non-contingent 10 cases. Id. (citing Gisbrecht, 535 U.S. at 807–08). 11 Here, the fee agreement between Plaintiff and Counsel, signed by both parties, provides: 12 As compensation for work beyond the Initial Hearing, including work at Appeals Council, Federal Court and/or Remand/Subsequent Hearing(s), I agree to pay my 13 attorney 25% of Past Due Benefits/Retroactive benefits AWARDED (pre-offset) to 14 me and my family (this includes any auxiliary beneficiaries) resulting from my disability claim at the time benefits are awarded. My attorney has explained to me 15 that it is the law that the attorney fee must be approved by the federal court for representation in federal court and by the Social Security Administration for 16 representation before the Social Security Administration. I understand that the total fee could amount to many thousands of dollars or many hundreds of dollars per 17 hour on an hourly basis; I understand that my attorney is accepting my case because 18 of the possibility of obtaining substantial fees. I agree to cooperate in any way that I can so that mv attorney’s full fee is authorized. I understand that my attorney may 19 seek the maximum fee this contract allows under the law. My attorney does not promise to minimize either the attorney fee he receives or that I pay under this 20 contract. 21 [. . .] 22 It is possible that I will not pay any attorney fee out of my past-due benefits for my 23 attorney's work on my behalf in court, but rather my attorney will receive the EAJA award as his or her sole compensation for representing me in court. However, my 24 attorney has the right under this contract to ask the court to award as much as 25% of my past-due benefits for representing me in court. If the court awards an attorney 25 fee out of my past-due benefits and also awards an EAJA fee for that same work, 26 my attorney must refund to me the smaller fee. 27 (Doc. 28-2 (signed October 21, 2019).) 28 The Court has considered the character of Counsel’s representation of Plaintiff and the good 1 results achieved by Counsel, which included an award of benefits. Counsel spent 27.8 hours 2 representing Plaintiff, ultimately gaining a favorable decision in that the Acting Commissioner’s 3 decision was reversed and remanded to the agency for reconsideration. (Doc. 28 at 4–5; Doc. 28-3 4 (time sheets accounting for 27.8 attorney hours spent representing Plaintiff before this Court).) 5 There is no indication that a reduction of the award is warranted due to any substandard performance 6 by Counsel as Counsel secured a successful result for Plaintiff. There is also no evidence that 7 counsel engaged in any dilatory conduct resulting in delay. 8 Although the accepted range in the Fresno Division for attorneys like Counsel with less than 9 ten years of experience (see Doc. 28 at 7) is between $175 and $300 per hour in non-contingency 10 cases, see Silvester v. Harris, No. 1:11–CV–2137 AWI SAB, 2014 WL 7239371 at *4 (E.D. Cal. 11 Dec. 17, 2014), here the effective hourly rate requested equals $965.09 per hour (see Doc. 24 at 8). 12 This hourly rate is not excessive when compared to what the Ninth Circuit has approved in cases 13 involving social security contingency fee arrangements. See Crawford, 586 F.3d 1142, 1153 (9th 14 Cir. 2009) (explaining that the majority opinion found reasonable effective hourly rates equaling 15 $519, $875, and $902) (J. Clifton, concurring in part and dissenting in part); see also Thomas v. 16 Colvin, No. 1:11-cv-01291-SKO, 2015 WL 1529331, at *2−3 (E.D. Cal. Apr. 3, 2015) (upholding 17 an effective hourly rate of $1,093.22 for 40.8 hours of work); Jamieson v. Astrue, No. 1:09-cv-0490- 18 LJO-DLB, 2011 WL 587096, at *2 (E.D. Cal. Feb. 9, 2011) (upholding an effective hourly rate of 19 $1,169.49 for 29.5 hours of work); Palos v. Colvin, No. CV 15-04261-DTB, 2016 WL 5110243, at 20 *2 (C.D. Cal. Sept. 20, 2016) (upholding an effective hourly rate of $1,546.39 for 9.7 hours of 21 work); Villa v. Astrue, No. CIV-S−06-0846-GGH, 2010 WL 118454, at *1−2 (E.D. Cal. Jan. 7, 22 2010) (approving section 406(b) fees exceeding $1,000 per hour for 10.4 hours of work, and noting 23 that “[r]educing § 406(b) fees after Crawford is a dicey business”). Further, attorney’s fees in the 24 amount of $26,829.60 do not exceed 25% of the past-due benefits awarded and are not excessive in 25 relation to the past-due award. See generally Ortega v. Comm’r of Soc. Sec., No. 1:12-cv-01030- 26 AWI-SAB, 2015 WL 5021646, at *3 (E.D. Cal. Aug. 21, 2015) (granting petition for an award of 27 attorney’s fees pursuant to section 406(b) in the amount of $24,350.00); Thomas, 2015 WL 28 1529331, at *3 (granting petition for an award of attorney’s fees pursuant to section 406(b) in the 1 amount of $44,603.50); Boyle v. Colvin, No. 1:12-cv-00954–SMS, 2013 WL 6712552, at *2 (E.D. 2 Cal. Dec. 19, 2013) (granting petition for an award of attorney’s fees pursuant to section 406(b) in 3 the amount of $20,577.57); Jamieson, 2011 WL 587096, at *2 (recommending an award of 4 attorney’s fees pursuant to section 406(b) in the amount of $34,500). 5 In making this determination, the Court recognizes the contingent-fee nature of this case and 6 Counsel’s assumption of risk in agreeing to represent Plaintiff under such terms. “District courts 7 generally have been deferential to the terms of contingency fee contracts in § 406(b) cases.” Hearn 8 v. Barnhart, 262 F. Supp. 2d 1033, 1037 (N.D. Cal. 2003) (“Because attorneys like Mr. Sackett 9 contend with a substantial risk of loss in Title II cases, an effective hourly rate of only $450 in 10 successful cases does not provide a basis for this court to lower the fee to avoid a ‘windfall.’” 11 (quoting Gisbrecht, 535 U.S. at 807)). Attorneys who agree to represent claimants pursuant to a 12 contingent fee agreement assume the risk of receiving no compensation for their time and effort if 13 the action does not succeed. Id. Here, Counsel accepted substantial risk of loss in representing 14 Plaintiff, whose application had already been denied at the administrative level. Plaintiff agreed to 15 the contingent fee. (See Doc. 28-2.) Working efficiently and effectively, Counsel secured a remand, 16 and ultimately, the award of substantial benefits to Plaintiff. (See Docs. 24, 28-1.) 17 An award of attorney’s fees in the amount of $26,829.60 is, therefore, appropriate. An award 18 fees, however, must be offset by any prior award of attorney’s fees granted under the EAJA. 28 19 U.S.C. § 2412; Gisbrecht, 535 U.S. at 796. As Plaintiff was previously awarded $5,742.43 in fees 20 pursuant to the EAJA, Counsel shall refund this amount to Plaintiff. 21 IV. CONCLUSION AND ORDER 22 For the reasons stated above, the Court concludes that the fees sought by Counsel pursuant 23 to section 406(b) are reasonable. Accordingly, IT IS ORDERED that: 24 1. Counsel’s motion for an award of attorney’s fees pursuant to 42 U.S.C. § 406(b) in 25 the amount of $26,829.60 (Doc. 28) is granted; 26 2. Counsel shall refund to Plaintiff $5,742.43 of the fees awarded as an offset for the 27 EAJA fees previously awarded pursuant to 28 U.S.C. § 2412(d) (Doc. 27); and 28 3. Counsel for Plaintiff shall file on the Court’s docket proof of service of this order 1 upon Plaintiff at his current or last known address. 2 IT IS SO ORDERED. 3 4 Dated: April 7, 2022 /s/ Sheila K. Oberto . UNITED STATES MAGISTRATE JUDGE 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28