Kenny Kellems, et al v. Commissioner Social Security

Filing 920101217

Opinion

Case: 09-10676 Document: 00511324321 Page: 1 Date Filed: 12/16/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
December 16, 2010 N o . 09-10676 Lyle W. Cayce Clerk

D A V I D L. KELLEMS, P la in t iff - Appellee v. M I C H A E L J. ASTRUE, Commissioner of Social Security D e fe n d a n t v. J E N N I F E R L. FRY; MORGAN & WEISBROD, L.L.P., Law Firm, Appellants

A p p e a l from the United States District Court fo r the Northern District of Texas

B e fo r e JOLLY, HIGGINBOTHAM, and SMITH, Circuit Judges. E . GRADY JOLLY, Circuit Judge: I n this social security case, we are asked to decide whether a federal court m a y order an attorney to remit to his client an award of attorney's fees under the E q u a l Access to Justice Act (the "EAJA") as an offset against fees awarded to the a t t o r n e y pursuant to 42 U.S.C. § 406(a) for work before the Social Security A d m in is tr a t io n . This appeal was stayed pending our decision in Rice v. Astrue, 6 0 9 F.3d 831 (5th Cir. 2010). There we held that federal courts do not have the d is c r e t io n to offset an EAJA award of attorney's fees for work performed before

Case: 09-10676 Document: 00511324321 Page: 2 Date Filed: 12/16/2010

No. 09-10676 a court with a future award of attorney's fees by a federal agency pursuant to 42 U .S .C . § 406(a). Id. at 839. We now hold, in accordance with Rice, that a federal c o u r t may not order an award of attorney's fees for work performed before a fe d e r a l agency pursuant to 42 U.S.C. § 406(a) to be offset by an award of a t t o r n e y 's fees for work performed before a federal court pursuant to the EAJA. We therefore vacate the order of the district court. I. T h e instant dispute stems from proceedings that began before the Social S e c u r it y Administration (the "SSA") in 1999. At that time, David Kellems (" K e l l e m s ") retained the law firm of Morgan & Weisbrod, L.L.P. ("M&W") to r e p r e s e n t him before the SSA and in federal court after his initial claim for d is a b ilit y benefits was denied.1 Kellems agreed to pay M&W the lesser of $4,000 o r 25 percent of any past disability benefits received from the SSA or in federal c o u r t, and to endorse over to his attorneys any award of fees under the Equal A c c e s s to Justice Act ("EAJA"). M&W represented Kellems before the SSA from 1 9 9 9 to 2002 and again in the appeal of the Social Security Commissioner's d e n ia l of Kellems's claim to disability benefits. That appeal resulted in an u n o p p o s e d motion for a "sentence four" remand to the SSA, which was granted b y the district court in 2003 pursuant to 42 U.S.C. § 405(g).2 T h e district court's remand made Kellems a "prevailing party" for purposes o f the EAJA. See Rice, 609 F.3d at 833­34. The EAJA provides that a court may a w a r d attorney's fees to a prevailing party for work performed before a court in a n appeal of an agency action where the position of the United States was not

Appellant Jennifer L. Fry is a partner at M&W. For purposes of simplification, we refer to Appellants collectively as M&W. Sentence four of § 405(g) grants the district court the power to affirm, modify, or reverse a decision of the Commissioner of Social Security, "with or without remanding the cause for a rehearing." 42 U.S.C. § 405(g).
2

1

2

Case: 09-10676 Document: 00511324321 Page: 3 Date Filed: 12/16/2010

No. 09-10676 " s u b s t a n t ia lly justified." 28 U.S.C. § 2412(d)(1)(A). On October 6, 2003, the d is t r ic t court issued a corrected judgment awarding M&W $9,147.93 in fees and c o s t s pursuant to this provision of the EAJA. I n May 2006, an Administrative Law Judge ("ALJ") of the SSA conducted a rehearing of Kellems's claim and determined that Kellems was, in fact,

d is a b le d . The ALJ awarded him $66,710.62 in past due benefits, withholding 25 p e r c e n t for possible payment of fees to Kellems's attorneys. On October 11, 2 0 0 8 , the ALJ authorized M&W to charge and collect $18,281.25 in additional fe e s out of Kellems's past-due benefits. This authorization was made pursuant t o 42 U.S.C. § 406(a), which governs the award of attorney's fees for work p e r fo r m e d before the SSA.3 I n March 2009, M&W filed a motion for additional attorney's fees pursuant t o 42 U.S.C. § 406(b), which governs the award of attorney's fees for work p e r fo r m e d before a court. In response to that motion, the district court issued a n Order of May 5, 2009, directing M&W to pay Kellems $9,147.93--that is, the a m o u n t "received by the attorneys on Kellems's behalf under the EAJA." M&W t im e ly appealed that ruling, and the appeal was stayed pending this Court's r e s o lu t io n of a similar case. We review de novo the district court's legal conclusion that it had the a u t h o r it y to offset an award of attorney's fees under § 406(a) with an award of fe e s under the EAJA. See Rice, 609 F.3d at 836 (citing, inter alia, SquiresA llm a n v. Callahan, 117 F.3d 918, 920 (5th Cir. 1997)). II. In Rice, we were asked "whether an attorney may earn both a § 406(a) a w a r d of attorney's fees at the administrative level and an EAJA award of a t t o r n e y 's fees at the judicial level." Id. Like the instant appeal, Rice involved

3

42 U.S.C. § 406 codifies a portion of the Social Security Act.

3

Case: 09-10676 Document: 00511324321 Page: 4 Date Filed: 12/16/2010

No. 09-10676 a n EAJA award of attorney's fees at the judicial level following a sentence four r e m a n d , and an award of attorney's fees at the administrative level pursuant to § 406(a). We emphasized that Congress made a clear choice in the Social

S e c u r it y Act: attorneys cannot double collect at the judicial level. See id. at 8 3 7 ­ 3 8 . That is, an award of fees under § 406(b) must be offset by the amount o f any award granted for the same work under the EAJA. The attorney must r e fu n d to the client the lesser amount of the two awards. Id. at 837. However, t h e same is not true when the two awards at issue are an EAJA award for work a t the judicial level and a § 406(a) award for work at the administrative level. We explicitly held in Rice that a district court may not "offset an EAJA award o f attorney's fees with a future 42 U.S.C. § 406(a) award of attorney's fees by the C o m m is s io n e r of Social Security." Id. at 839. I n this case, the district court based its order to remit payment on the p r in c ip le that all EAJA awards granted for work performed on a claim must o ffs e t the SSA fees awarded for work performed on the same claim. That

p r in c ip le did not survive our holding in Rice. In accordance with that decision, w e now hold that the district court did not have the authority to order M&W to r e m it the EAJA award to Kellems as an offset to the fee award under § 406(a). III. W e sum up: In Rice, we held that a federal court may not order a court's a w a r d of attorney's fees under the EAJA to be offset by an administrative a g e n c y 's future award of attorney's fees pursuant to 42 U.S.C. § 406(a). Similarly, a federal court may not, as the district court has done here, order an a g e n c y 's award of attorney's fees pursuant to 42 U.S.C. § 406(a) to be offset by a court's award of attorney's fees under the EAJA. We therefore vacate the order o f the district court.4
Appellants also ask us to rule upon whether the district court had jurisdiction to determine the amount of a fee for representation under 42 U.S.C. § 406(a), and whether the
4

4

Case: 09-10676 Document: 00511324321 Page: 5 Date Filed: 12/16/2010

No. 09-10676 VACATED.

district court properly ordered M&W to pay the filing fee for Kellems's civil action. These issues are not properly before us in this appeal of the district court's Order of May 5, 2009 directing Fry to remit the $9,147.93 EAJA award to Kellems.

5