Buljina v. Astrue , 828 F. Supp. 2d 109 ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SEAD BULJINA, :
:
Plaintiff, : Civil Action No.: 08-1904 (RMU)
:
v. : Document No.: 23
:
MICHAEL J. ASTRUE, :
Commissioner of the Social Security :
Administration, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING THE PETITION FOR ATTORNEY’S FEES
I. INTRODUCTION
This matter comes before the court on a petition for an award of attorney’s fees. The
petitioner is an attorney who successfully prosecuted his client’s claim for disability insurance
benefits under the Social Security Act. The attorney has now filed a petition under 42 U.S.C. §
406(b) for an award of $21,609.25 in attorney’s fees – a sum that was agreed upon pursuant to a
contingency fee agreement. Because the petitioner has shown that the award sought is
reasonable, the court grants his petition.
II. FACTUAL AND PROCEDURAL BACKGROUND
The plaintiff first applied for disability insurance benefits under Title II of the Social
Security Act in October 2005. Commissioner’s Response to Pet. (“Response”) at 1. The
plaintiff was not represented by counsel during the initial administrative phase of this case. Id. at
4; Reply at 9. In December 2007, an administrative law judge (“ALJ”) then determined that the
plaintiff was not entitled to disability benefits. Response at 4. The plaintiff’s request for review
was denied at the appellate level of the administrative agency, thus rendering the ALJ’s decision
final. Id.The plaintiff then hired an attorney on a contingency basis, under which the plaintiff
agreed to pay 25% of the plaintiff’s past-due benefits in the event that his claim was successful.1
Id., Ex. B. In 2008, the plaintiff filed suit in this court. See generally Compl. Following the
filing of the plaintiff’s opening brief, the defendant filed a consent motion for voluntary remand.
Pet. at 1. This court granted the motion and remanded the case for further proceedings. Id. The
plaintiff prevailed on remand; an ALJ issued a decision awarding the plaintiff a substantial
amount of benefits in February 2011. Id. In relevant part, the ALJ awarded the plaintiff
$86,437.00 in past-due benefits. Id.In September 2011, the plaintiff’s attorney filed a petition for attorney’s fees under
section 206(b)(1) of the Social Security Act, which is codified at 42 U.S.C. § 406(b).2 See
generally Pet. With that petition ripe for review, the court now turns to the relevant legal
standards and the parties’ arguments.
III. ANALYSIS
A. Legal Standard for an Award of Attorney’s Fees Under 42 U.S.C. § 406(b)
Section 406(b) allows the attorney of a successful social security claimant to petition for
an award of reasonable attorney’s fees. 42 U.S.C. § 406(b)(1)(A). The award is payable out of
the claimant’s award of past-due benefits, but the award may not exceed a sum greater than 25%
1
“Past-due benefits” is defined to mean “the total amount of benefits payable under Title II of the
Act to all beneficiaries that has accumulated because of a favorable administrative or judicial
determination or decision . . . .” 20 C.F.R. § 404.1703.
2
For the sake of clarity, the court will refer to this provision as § 406 to reflect its current position
in the United States Code.
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of those benefits. Id. Section 406(b) requires courts to undertake a “review of such
arrangements as an independent check, to assure that they yield reasonable results in particular
cases.” Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002). As discussed below, the determination
of which factors indicate a “reasonable” award in any particular case requires further analysis.
In Gisbrecht v. Barnhart, the Supreme Court set forth the framework that governs
judicial review of petitions for attorney’s fees under § 406(b). See generally id. By way of
background, Gisbrecht observed that many civil rights statutes include a “fee-shifting” provision,
which requires a losing defendant to pay for the winner’s attorney’s fees and costs. See, e.g., 42
U.S.C. § 1988 (allowing reasonable attorney’s fees in cases brought under various
Reconstruction-era civil rights statutes); 42 U.S.C. § 2000e-5(g)(2)(A) (allowing courts to award
attorney’s fees and costs under Title VII of the Civil Rights Act of 1964). These fee-shifting
provisions are intended to encourage private individuals and their attorneys to bring lawbreakers
to account and thus secure broad compliance with this nation’s civil rights laws. See Newman v.
Piggie Park Enters., Inc., 390 U.S. 400, 401 (1968). The typical method of calculating an award
of attorney’s fees under these statutes is known as the “lodestar” method, under which a court is
asked to multiply the number of hours expended in the litigation by a reasonable hourly billing
rate. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
Section 406(b) is of a different ilk. This provision does not require the losing party to
pay the winner’s attorney’s fees. Gisbrecht, 535 U.S. at 802. Rather, § 406(b) authorizes the
attorney of a successful claimant to recover directly from her client. 535 U.S. at 802 & n.12.
Because § 406(b) is not a fee-shifting statute per se, Gisbrecht concluded that the “lodestar”
analysis is not the primary method of calculating awards of attorney’s fees under the Social
Security Act. Id.
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In contrast, Gisbrecht noted that Social Security claimants most commonly hire attorneys
on a contingency basis. Id. Under a typical contingency fee arrangement, the plaintiff contracts
with her attorney such that the attorney may recover some percentage of the proceeds in the
event that the litigation is successful. Id. at 803. One feature of such arrangements is that they
often allow plaintiffs’ lawyers to recover a sum that far exceeds the amount they would have
received if they had charged an hourly rate. Attorneys who accept payment on a contingent basis
reap these rewards because they “tak[e] upon themselves the risk that they will receive no
payment at all,” thus reflecting the high rate of return that accompanies a high-risk investment.
Hensley, 461 U.S. at 448 (Burger, C.J., concurring); see City of Burlington v. Dague, 505 U.S.
557, 571 (1992) (“An attorney operating on a contingency-fee basis pools the risks presented by
his various cases: cases that turn out to be successful pay for the time he gambled on those that
did not.”). Although contingency fees drew criticism in early American jurisprudence,3 courts
have come to recognize that these fee arrangements permit attorneys to provide legal
representation to plaintiffs who could not otherwise afford their day in court. See, e.g., Leonard
C. Arnold, Ltd. v. N. Trust Co., 506 N.E. 2d 1279, 1281 (Ill. 1987) (“[Contingency fee]
agreements are the poor man’s key to the courthouse door: they enable persons who cannot
afford to retain an attorney on an hourly or fixed-fee basis to pursue their claims with competent
counsel.”) (quotation omitted).
Against this backdrop, Gisbrecht held that contingency fee arrangements are permissible
under § 406(b). Gisbrecht nevertheless affirmed that courts still play a vital role in adjudicating
such fee awards, holding that § 406(b) “calls for court review of such arrangements as an
3
See, e.g., Butler v. Legro, 62 N.H. 350, 352 (1882) (“Agreements of this kind are contrary to
public justice and professional duty, tend to extortion and fraud, and are champertous and void.”).
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independent check” to ensure that they do not yield a “windfall” to the plaintiff’s attorney. Id. at
807 & n.17.
The Gisbrecht Court left open which factors should guide a district court’s analysis when
reviewing a petition for attorney’s fees.4 Id. It made reference to a few potential guideposts,
however. For example, a court may order a reduced fee if the representation is substandard, if
the attorney is responsible for delay or if the benefits are disproportionately large when
compared to the amount of time that the attorney spent on the case. Id. at 808. Perhaps most
saliently, the Court overruled those cases which had consulted the lodestar method as the
exclusive manner of calculating a reasonable amount for an award. Id. at 806.
Following Gisbrecht, district and circuit courts alike have endeavored to assemble a list
of factors that might guide a district court’s discretion when determining the “reasonableness” of
a contingency fee. See, e.g., Hearn v. Barnhart, 262 F. Supp. 2d 1033, 1036-38 (N.D. Cal. 2003)
(considering the risk of litigation loss, the experience of counsel, the percentage of funds the fee
consumes, the value of the case to the plaintiff and the client’s consent to the fee requested);
Coppett v. Barnhart, 242 F. Supp. 2d 1380, 1393-85 (S.D. Ga. 2002) (considering the risk of
loss, the difficulty of the case and the skill or experience of the attorney). Their efforts have not
yielded one composite or comprehensive list of factors. Rather, these cases affirm two
propositions: (1) the authority to determine which contingency fees are “reasonable” is vested in
4
The extent to which the Court left this question open has been grounds for criticism. See 535
U.S. at 809 (Scalia, J., dissenting) (“I do not know what the judges of our district courts and
courts of appeals are to make of today’s opinion . . . While today’s opinion gets this case out of
our “in” box, it does nothing whatever to subject these fees to anything approximating a uniform
rule of law.”). Although Gisbrecht did not set forth a definitive inventory of factors to consider,
courts have traditionally exercised a “wary supervision” over contingency fee arrangements and
have scrutinized their terms. Gair v. Peck, 6 N.Y. 2d 97, 106 (1959); see also Pocius v.
Halvorsen, 30 Ill. 2d 73, 83 (1964) (“A contingent fee is always subject to the supervision of the
court as to its reasonableness.”); Tonn v. Reuter, 6 Wis. 2d 498, 504 (1959) (same).
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the discretion of the district court; and (2) the district court’s discretion is to be guided by the
facts of each particular case. See, e.g., Jeter v. Astrue, 622 F.3d 371, 381 (5th Cir. 2010)
(concluding that “district courts are in a better position to determine what factors are relevant in
considering whether the success of a claimant’s claim” and thus refraining from “forcing our
lower courts into applying an arbitrary, formulaic set of factors of our own making”); Mudd v.
Barnhart, 418 F.3d 424, 428 (4th Cir. 2005) (“[Gisbrecht] did not provide a definitive list of
factors to be considered because it recognized that the judges of our district courts are
accustomed to making reasonableness determinations in a wide variety of contexts.” (quotation
and alterations omitted)).
B. The Court Grants the Petition for Attorney’s Fees
The petitioner seeks 25% of past-due benefits pursuant to the contingency agreement that
the plaintiff entered into with his counsel. Pet. at 2; id., Ex. B. The parties agree that the
claimant here is entitled to $86,437.00 in past-due benefits. Id. The petitioner argues that this
fee request is reasonable in light of the “excellent results” of his legal representation. Id. at 2.
In response, the Commissioner “takes no position with regard to the reasonableness of
this amount.” Response at 3. Rather, the Commissioner asks the court to “independently check”
the reasonableness of the fee. Id. More specifically, the Commissioner notes that calculation of
the hourly rate would yield reimbursement at a rate of approximately $573 per hour and suggests
– albeit obliquely – that this hourly rate “is not unquestionably reasonable.” Id.
No evidence before the court suggests that the contingency fee sought here would yield
an unjustified windfall to the petitioner. The plaintiff had suffered several legal setbacks in
pursuit of his claim before retaining the petitioner, who then succeeded in persuading an ALJ to
award his client a substantial sum of money. Pet. at 2; Response at 3. There is no evidence
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suggesting that the quality of the petitioner’s representation was insufficient. Cf. Gisbrecht, 535
at 808. Moreover, no evidence indicates that the petitioner caused any undue delay in pursuing
the claim or that the award sought here would dwarf the number of hours the petitioner spent on
the case. Cf. id. In addition, there is no evidence of “fraud or overreaching” in the formation of
the contingency fee agreement. Cf. Crawford v. Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009);
Gisbrecht, 535 at 812 (Scalia, J., dissenting) (warning courts to scrutinize contingency fees that
are presented to “the typically unsophisticated client on a take-it-or-leave-it basis”). Finally, the
court’s independent review of the filings indicate that the plaintiffs’ counsel prosecuted this case
in a timely, efficient and effective manner. See generally Pet., Exs. A-B.
The only objection raised against the petition is the Commissioner’s veiled suggestion
that calculation of the lodestar figure would yield a lower award of attorney’s fees.5 Response at
3. Gisbrecht and later cases make clear, however, that calculation of the hourly rate must not
provide the sole basis for adjudicating a petition for attorney’s fees when the attorney is retained
on a contingency basis. See Crawford v. Astrue, 586 F.3d at 1150-51 (reversing the district court
because it determined the reasonableness of an attorney’s fee solely by measuring its distance
from the lodestar amount). Of course, the lodestar amount may be considered in addition to
other factors which indicate that the contingency fee would allow an unjustified windfall to the
petitioner. See Gisbrecht, 535 U.S. at 809; Jeter v. Astrue, 622 F.3d at 1152-53. No such factors
are present here.
5
The Commissioner also objects on the basis that several of the hours billed represent those of the
petitioner’s law clerk. Response at 3. This objection has little merit; the “law clerk” here is a
licensed attorney (an honors graduate from Loyola University of Chicago School of Law, no less)
who has several years of relevant work experience. Reply at 3.
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In sum, the court has reviewed the petitioner’s filings and concludes that application of
the 25% contingency is reasonable in this case. Accordingly, the court grants the petition for an
award of $21,609.25 in attorney’s fees.
IV. CONCLUSION
For the foregoing reasons, the court grants the petition for an award of attorney’s fees.
An Order consistent with this Memorandum Opinion is separately and contemporaneously issued
this 8th day of December, 2011.
RICARDO M. URBINA
United States District Judge
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