Escamilla v. Berryhill ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MANUEL P. ESCAMILLA, Case No. 17-cv-01621-BAS-JMA 12 Plaintiff, ORDER GRANTING PLAINTIFF’S 13 MOTION FOR APPROVAL OF v. ATTORNEY’S FEES (ECF No. 21) 14 ANDEW M. SAUL, Commissioner of 15 Social Security, 16 Defendant. 17 18 Presently before the Court is Plaintiff Manuel Escamilla’s motion for approval of 19 attorney’s fees under 42 U.S.C. § 406(b). (ECF No. 21.) The Commissioner of Social 20 Security responded to the motion. (ECF No. 23.) The Court finds Escamilla’s motion 21 suitable for determination on the papers submitted and without oral argument. See Fed. R. 22 Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For the following reasons, the Court GRANTS the 23 motion for approval of attorney’s fees. 24 I. BACKGROUND 25 On August 24, 2012, Escamilla filed an application for a period of disability and 26 disability insurance benefits, alleging disability commencing on February 2, 2009. 27 (Administrative Record (“AR”) 186–88, ECF No. 8.) The claim was denied on initial 28 review on January 24, 2014, and on reconsideration on June 23, 2014. (AR 129–34.) 1 Escamilla then requested a de novo hearing before an Administrative Law Judge (“ALJ”) 2 on July 10, 2014. An ALJ heard the case and determined Escamilla was not disabled as 3 defined under the Social Security Act. (AR 22–47.) Escamilla requested an Appeals 4 Council review, but the request was denied on June 13, 2017—making the ALJ’s decision 5 the final decision of the Commissioner. (AR 1–7.) 6 To challenge the Commissioner’s decision, Escamilla retained counsel and entered 7 into a Social Security Representation Agreement (“Representation Agreement”). 8 (Representation Agreement, Rohlfing Decl. ¶ 2, Ex. 1, ECF No. 21-1.) The Representation 9 Agreement provides that the fee for “successful prosecution of this matter is . . . 25% of 10 the backpay awarded upon reversal of any unfavorable ALJ decision for work before the 11 court.” (Id. § 4.) 12 On August 10, 2020, Escamilla sought judicial review in this Court. (ECF No. 1.) 13 He and the Commissioner then filed cross-motions for summary judgment. (ECF Nos. 10, 14 11.) On June 14, 2018, the Court issued an order granting Escamilla’s motion for summary 15 judgment and denying the Commissioner’s cross-motion. (ECF No. 15.) In brief, the 16 Court found that the ALJ committed harmful error by improperly handling medical opinion 17 evidence. (Id.) Hence, the Court reversed the Commissioner’s decision and remanded the 18 matter for further proceedings. (Id.) 19 In light of the Court’s decision, the parties filed a joint motion for an award of 20 attorney’s fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d). 21 (ECF No. 18.) The Court granted the joint motion and awarded Escamilla $2,600 in 22 attorney’s fees. (ECF No. 20.) 23 Upon remand, an ALJ held a second hearing and heard additional testimony. And 24 in a fully-favorable decision dated June 5, 2020, the ALJ found Escamilla to be disabled 25 as of November 11, 2011. (Rohlfing Decl. ¶ 3, Ex. 2, ECF No. 21-2.) Accordingly, on 26 July 15, 2020, the Agency issued a notice providing that Escamilla is entitled to 27 approximately $190,000 in past-due benefits. (See id. ¶ 4, Ex. 3, ECF No. 21-3.) 28 1 Escamilla now returns to this Court to seek approval of attorney’s fees of $30,000— 2 approximately 15.8% of the past-due benefits. (Mot., ECF No. 21.) The real-party-in- 3 interest, Escamilla’s counsel, served a copy of the motion on Escamilla and informed him 4 that he could oppose the request. (Proof of Service, ECF No. 21 at 15.) He has not done 5 so. The Commissioner, however, has filed a response. (ECF No. 23.) 6 II. ANALYSIS 7 The law regulates the fees that attorneys may charge Social Security claimants for 8 representation before the Social Security Administration and a reviewing court. See 42 9 U.S.C. § 406(a)–(b). The representation here concerned Escamilla’s claim for benefits 10 under Title II of the Social Security Act. Title II “‘is an insurance program’ that ‘provides 11 old-age, survivor, and disability benefits to insured individuals irrespective of financial 12 need.’” Culbertson v. Berryhill, 139 S. Ct. 517, 519–20 (2019) (quoting Bowen v. 13 Galbreath, 485 U.S. 74, 75 (1988)). A claim for Title II benefits may “result in payments 14 of past-due benefits—i.e., benefits that accrued before a favorable decision—as well as 15 ongoing monthly benefits.” Id. (citations omitted). 16 Escamilla received an award of past-due benefits after this Court entered a judgment 17 in his favor. Hence, the relevant fee provision is 42 U.S.C. § 406(b). This statute provides: 18 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 19 determine and allow as part of its judgment a reasonable fee for such 20 representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the 21 Commissioner of Social Security may . . . certify the amount of such fee for 22 payment to such attorney out of, and not in addition to, the amount of such past-due benefits. 23 24 42 U.S.C. § 406(b)(1)(A). Accordingly, § 406(b) limits fees for representation before the 25 court “to no more than 25% of past-due benefits and allows the agency to withhold past- 26 due benefits to pay these fees.” Culbertson, 139 S. Ct. at 520. 27 Social Security claimants routinely enter into “contingent-fee contracts that produce 28 fees no higher than the 25 percent ceiling.” Gisbrecht v. Barnhart, 535 U.S. 789, 800 1 (2002); see also Crawford v. Astrue, 586 F.3d 1142, 1147 (9th Cir. 2009) (en banc). In 2 Gisbrecht, the Supreme Court determined that “§ 406(b) does not displace contingent-fee 3 agreements as the primary means by which fees are set for successfully representing Social 4 Security benefits claimants in court.” 535 U.S. at 807. Instead, because the statute 5 authorizes a “reasonable fee,” it “calls for court review of such arrangements as an 6 independent check, to assure that they yield reasonable results in particular cases.” See id. 7 Further, where a contingency agreement exists, the Supreme Court emphasized that 8 the starting point for assessing the reasonableness of the fee amount is the agreement itself, 9 not the familiar lodestar method. Gisbrecht, 535 U.S. at 797–809. In testing the 10 contingency agreement’s reasonableness, the court may appropriately reduce “the 11 attorney’s recovery based on the character of the representation and the results the 12 representative achieved.” Id. at 808. For example, a downward adjustment may be 13 justified if the attorney was responsible for delay, “so that the attorney will not profit from 14 the accumulation of benefits during the pendency of the case in court.” Id. at 808. 15 Moreover, where counsel is set to receive a windfall because “the benefits are large in 16 comparison to the amount of time counsel spent on the case, a downward adjustment is 17 similarly in order.” See id. at 808; accord Astrue, 586 F.3d at 1151 (“The court may 18 properly reduce the fee for substandard performance, delay, or benefits that are not in 19 proportion to the time spent on the case.”). “As evidence of the reasonableness of the 20 resulting fee, the court may require counsel to submit a record of hours spent and a 21 statement of normal hourly billing charges.” Astrue, 586 F.3d at 1151. However, 22 “‘satellite litigation’ over attorneys’ fees should not be encouraged.” Id. at 1152 (quoting 23 Gisbrecht, 535 U.S. at 808). Finally, although the court’s focus is on the contingency 24 agreement, the court can “consider the lodestar calculation, but only as an aid in assessing 25 the reasonableness of the fee.”1 Id. 26 27 1 Because fees under § 406(b) are paid from past-due benefits, the Commissioner of Social Security “has no direct financial stake in the answer to the § 406(b) question; instead [he] plays a part in 28 1 Escamilla’s Representation Agreement authorizes his counsel to receive “25% of the 2 backpay awarded upon reversal of any unfavorable ALJ decision for work before the 3 court.” (Representation Agreement § 4.)2 In assessing whether the requested fee is 4 reasonable, the Court initially notes that there is no evidence of “fraud or overreaching” in 5 the negotiation of the Representation Agreement. See Astrue, 586 F.3d at 1145. Indeed, 6 such agreements are common, and Escamilla has been given the opportunity to oppose the 7 motion for approval of his counsel’s fee. He has not done so. Further, a reduction for 8 substandard performance is not warranted. Escamilla’s counsel ably represented him and 9 was successful in obtaining a favorable judgment that led to his award of substantial past- 10 due benefits. Nor is a reduction for delay warranted here. Escamilla’s counsel met every 11 briefing deadline in this case, and there was thus no “‘excessive delay’ attributable to” 12 Escamilla’s counsel in the proceedings before this Court. See id. at 1146. 13 In addition, the proposed fee would not be a windfall to Escamilla’s counsel. 14 Although the Representation Agreement authorizes counsel to seek up to 25% of 15 Escamilla’s past-due benefits—approximately $47,500—the requested fee of $30,000 is 16 only about 15.8% of the past-due benefits. The requested fee, which is “significantly 17 lower” than the fee bargained for in the Representation Agreement, is “not excessively 18 large in relation to the benefits achieved.” See Astrue, 586 F.3d at 1151. Moreover, 19 Escamilla’s counsel’s decision to “voluntarily reduce[]” the requested fee from “the 20 allowable 25%” suggests the fee will not be a windfall. See id. at 1152. 21 22 Commissioner “takes no position” in this case whether the requested fee “is reasonable under the case law.” (ECF No. 23.) 23 2 The Representation Agreement also provides Escamilla’s counsel may seek a separate 25% of his past-due benefits for work before the Agency. (See Representation Agreement §§ 3–4.) The Supreme 24 Court has determined that “the 25% cap” in § 406(b) “applies only to fees for representation before the 25 court, not the agency.” Culbertson, 139 S. Ct. at 522. Escamilla’s counsel states to the Court that he “will seek fees under 42 U.S.C. § 406(a).” (Rohlfing Decl. ¶ 6.) However, “[t]he aggregate of all fees received 26 by counsel from administrative and Court awards will not exceed 25 percent of back benefits.” (Id.; see also Mot. 6–7 (“Counsel exercises billing discretion to limit the aggregate of all fees received to 25% of 27 the past due benefits, the only withholding the Commissioner makes.”).) Hence, although the Representation Agreement and the law may entitle Escamilla’s counsel to seek a larger share of his past- 28 1 Further, the Court notes that counsel spent 11.2 hours of attorney time and 3.45 hours 2 of paralegal time on Escamilla’s case at the district court level. Although counsel is 3 receiving a substantial award on a per-hour basis, the Court does not want to penalize 4 counsel for being efficient. Counsel also highlights various district court decisions in the 5 Ninth Circuit approving comparable fees at comparably high hourly rates. (See Mot. at 4– 6 6.) The Court finds consideration of the hourly rate is not particularly helpful in this case 7 and does not establish the fee would be a windfall. 8 Overall, the Court finds that the requested fee is reasonable. Escamilla agreed that 9 his counsel would be paid up to 25% of his past-due benefits for representation in this 10 Court, and his counsel chose to bear the risk of non-payment in the event that the appeal 11 was unsuccessful. His counsel now seeks $30,000, which is only approximately 15.8% of 12 the past-due benefits. Escamilla has not objected to this request. Given the circumstances 13 of the case, the Court finds a downward adjustment to the requested fee is not appropriate. 14 Therefore, the Court will grant Escamilla’s motion for approval of $30,000 in fees under 15 42 U.S.C. § 406(b). 16 * * * 17 Having approved fees under § 406(b), the Court briefly discusses Escamilla’s 18 counsel’s prior EAJA award. As mentioned, the Court awarded Escamilla’s counsel 19 $2,600 in fees under the EAJA. “Congress amended the EAJA in 1985 to add a savings 20 provision that allows attorneys to receive fees under both § 406(b) and [EAJA, 28 U.S.C.] 21 § 2412.” Parrish v. Comm’r of Soc. Sec. Admin., 698 F.3d 1215, 1218 (9th Cir. 2012). 22 “However, in order to maximize the award of past-due benefits to claimants and to avoid 23 giving double compensation to attorneys, the savings provision requires a lawyer to offset 24 any fees received under § 406(b) with any award that the attorney receives under § 2412 if 25 the two were for the ‘same work.’” Id.; see also Gisbrecht, 535 U.S. at 796 (noting the 26 claimant’s attorney must refund to the claimant the smaller fee amount). Because here 27 Escamilla’s counsel’s fees under the EAJA and § 406(b) are for the same work, the Court 28 will order Escamilla’s counsel to remit the $2,600 fee award to Escamilla. 1 CONCLUSION 2 In light of the foregoing, the Court GRANTS Escamilla’s motion for approval of 3 || attorney’s fees under 42 U.S.C. § 406(b) (ECF No. 21). The Court approves Escamilla’s 4 ||counsel’s request to receive $30,000 in fees withheld by the Social Security 5 || Administration. Further, the Court ORDERS Escamilla’s counsel to remit to Escamilla 6 || the $2,600 that counsel received under the EAJA. 7 IT IS SO ORDERED. 8 / 9 || DATED: August 26, 2020 sii A 5 Hipha. 6 10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 78