Thornton v. Astrue

Filing 35

MEMORANDUM OPINION AND ORDER entered. The Court ORDERS that the petitioner receive as an attorney's fee for services rendered in this Court for the sum of $13,278.75 pursuant to 42 U.S.C. § 406(b). Upon receipt of this award, the petitioner is to refund to the plaintiff the smaller EAJA attorney-fee award paid in this case ($1,800.00 (see Docs. 31 & 32)). Signed by Magistrate Judge William E. Cassady on 8/20/2012. (eec)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
NORTHERN DIVISION
JOHNNY RAY THORNTON,

:

Plaintiff,

:

v.

:

MICHAEL J. ASTRUE,
Commissioner of Social Security,

:

Defendant.

CA 2:09-00461-C

:
MEMORANDUM OPINION AND ORDER

This cause is before the Court, pursuant to 28 U.S.C. § 636(c) and Rule 54(d)(2)(D)
of the Federal Rules of Civil Procedure, on the petition for authorization of attorney’s
fees under the Social Security Act, 42 U.S.C. § 406(b) (Doc. 33; see also Doc. 34 (motion to
supplement)).1

Upon consideration of all pertinent materials contained in the file, it is

determined that the petitioner should receive a reasonable fee in the amount of
$13,278.75 under the Social Security Act.
Findings of Fact
William T. Coplin, Jr., Esquire, was hired by the plaintiff to represent him in
connection with his claim for Supplemental Security Income and Disability Insurance
Benefits on October 3, 2006. (See Doc. 33-2 (the “Attorney Fee Agreement”).)

The

Attorney Fee Agreement provides, in part, that if the plaintiff receives a favorable
decision from the Social Security Administration (the “Administration”) after the
decision of a federal court, the plaintiff will pay his attorney “a fee equal to 25% of all

1

On August 17, 2012, the petitioner moved to supplement the motion for
attorney’s fees with a copy of the May 23, 2012 Fully Favorable Decision issued by the ALJ on
remand. That motion is hereby GRANTED.

past-due benefits” regardless of an otherwise applicable limit set forth in the Attorney
Fee Agreement.

(See id., ¶ 4.)

On April 19, 2010, this Court entered a memorandum opinion ordering that the
Commissioner of Social Security’s decision denying the plaintiff benefits be reversed
and remanded for further proceedings (Doc. 26).

After this Court’s remand, the

Administrative Law Judge ultimately rendered a fully favorable decision, dated May
23, 2012, in which the ALJ determined that the plaintiff is disabled and entitled to
disability insurance benefits commencing August 31, 2005, his protective date.2

(See

Doc. 34-1.)
Based on the plaintiff’s “Notice of Award” from the Administration (Doc. 33-3),
the petitioner has calculated that the plaintiff’s past due benefits amount to $77,115.00
(see id. at 2).

Twenty-five percent (25%) of the total past due benefits is $19,278.75.

But, because the petitioner has already been paid $6,000 for administrative attorney fees
(see Doc. 33-4), he is only requesting that $13,278.75 be approved as an attorney’s fee for
legal services rendered to the plaintiff—which represents the remainder of 25% of the
past-due benefits to which the Administration has determined that the plaintiff is
entitled under the Act, less the $6,000 the petitioner has received from the
Administration for services rendered before it—for the 12.75 hours he spent before this
Court representing the plaintiff (see Doc. 33-5).
Conclusions of Law
Section 206(b) of the Social Security Act, codified at 42 U.S.C. § 406(b), provides
that a court which renders a favorable judgment to a Social Security claimant may
2

On remand, the plaintiff, “acting by and through his representative[,] amended
the alleged onset date of disability to August 31, 2005.” (Doc. 34-1 at 5.)

2

award the claimant’s attorney a reasonable fee for his representation of the claimant
“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 Commissioner of Social Security may,
notwithstanding the provisions of section 405(i) of this title, but subject to subsection (d)
of this section, certify the amount of such fee for payment to such attorney out of, and
not in addition to, the amount of such past-due benefits.” 3

Section 406(b) thus

“provides for contingent fees to be charged to the client, with the amount to be set by
the district court subject to a statutory maximum.” Watford v. Heckler, 765 F.2d 1562,
1566 (11th Cir. 1985) (citation omitted; emphasis in original); see Meyer v. Sullivan, 958
F.2d 1029, 1035 n.12 (11th Cir. 1992) (the total amount of attorney’s fees that may be
awarded under the Social Security Act is limited to 25% of the past-due benefits
awarded).
The Supreme Court has held that Ҥ 406(b) does not displace contingent-fee
agreements within the statutory ceiling; instead, § 406(b) instructs courts to review for
reasonableness fees yielded by those agreements.”

Gisbrecht v. Barnhart, 535 U.S. 789,

808-09 (2002); see also id. at 807 (“Congress has provided one boundary line:
Agreements are unenforceable to the extent that they provide for fees exceeding 25
percent of the past-due benefits. . . .

Within the 25 percent boundary, as petitioners in

this case acknowledge, the attorney for the successful claimant must show that the fee
sought is reasonable for the services rendered.”).

3

“When a claimant receives a favorable administrative decision following a
remand of a case by the district court to the [Commissioner], the district court may award
attorney’s fees pursuant to 42 U.S.C. § 406(b)(1).” Rohrich v. Bowen, 796 F.2d 1030, 1031 (8th
Cir. 1986) (citation omitted).

3

Courts that approach fee determinations by looking first to the
contingent-fee agreement, then testing it for reasonableness, have
appropriately reduced the attorney’s recovery based on the character of
the representation and the results the representative achieved. If the
attorney is responsible for delay, for example, a reduction is in order so
that the attorney will not profit from the accumulation of benefits during
the pendency of the case in court. If the benefits are large in comparison
to the amount of time counsel spent on the case, a downward adjustment
is similarly in order. In this regard, the court may require the claimant’s
attorney to submit, not as a basis for satellite litigation, but as an aid to the
court’s assessment of the reasonableness of the fee yielded by the fee
agreement, a record of the hours spent representing the claimant and a
statement of the lawyer’s normal hourly billing charge for
noncontingent-fee cases.
Id. at 808 (internal citations omitted).
In line with Gisbrecht, therefore, this Court need begin with the contingency fee
agreement and should only reduce the amount called for by the agreement upon a
determination that this amount is unreasonable.

In adopting this approach, the

Supreme Court rejected the Eleventh Circuit’s adoption of the lodestar calculation of
fees in Kay v. Apfel, 176 F.3d 1322, 1323 (11th Cir. 1999) (rejecting the “contingent fee”
approach to calculation of attorney’s fees under § 406(b) in favor of the “lodestar”
approach) in favor of the contingency fee approach of other Circuits, including the
Second Circuit, in Wells v. Sullivan, 907 F.2d 367, 371 (2d Cir. 1990) (district courts must
begin with the contingency fee agreement and may only “reduce the amount called for
by the contingency agreement [] when it finds the amount to be unreasonable”); see also
Gisbrecht, 535 U.S. at 799 & 808-09.
In this matter, the Administration has determined that the past-due disability
insurance benefits to which the plaintiff is entitled to receive total $77,115.00 (see Doc.
33-3 at 2); 25% of this amount is $19,278.75.

The contingency agreement, which the

plaintiff entered into on October 3, 2006, contemplates attorney’s fees of as much as 25%
4

of the claimant’s past-due benefits following a favorable decision (see Doc. 33-2, ¶ 4),
and it is apparent to the Court that the amount requested by the petitioner herein
($13,278.75), when combined with the $6,000.00 the petitioner has been awarded by the
Administration, is not more than 25% of the past-due benefits the plaintiff has been
awarded in this case.

Moreover, there is no evidence that the petitioner delayed this

case in any manner, nor can the Court find that the requested amount is so large as to
be a windfall to the petitioner.4

Given the length of petitioner’s relationship with the

claimant (almost six years) and the favorable results achieved by petitioner for the
claimant, the Court considers the requested amount reasonable.
Finally, the Court notes that the Administration’s “Notice of Award” letter
appears to contain an error.

Instead of withholding the entire attorney’s fee award

(twenty-five percent) from the plaintiff’s past-due benefits, the Commissioner
erroneously states that “[u]nder the fee agreement, the representative cannot charge
you more than $6,000.00 for his or her work[ and b]ecause of the law, we usually
withhold 25 percent of the total past-due benefits to pay an approved representative’s
fee.

[But, here, we only] withheld $6,000.00 from your past-due benefits to pay the

representative.”

(Doc. 33-3 at 2.)

This error by the Commissioner does not deprive

the petitioner of the proper amount of attorney’s fees due to him under the contingency
fee agreement, an amount the Court finds to be reasonable.

For example, in Silliman v.

Barnhart, 421 F. Supp. 2d 625 (W.D.N.Y. 2006), the Commissioner acknowledged an
identical error (there, withholding only $4,000.00 instead of the entire attorney’s fee
award (25%)) and
4

The request, when broken down, renders an hourly rate of approximately

$1,041.47.

5

sent a letter to plaintiff and [his attorney] alerting them of the error, as
well as plaintiff’s obligation to pay her attorney the amount of the
court-approved fee. The letter also informed plaintiff that if she did not
pay the attorney’s fee balance approved by the Court, the Commissioner
would have to take action to withhold the amount from plaintiff's future
benefits until the balance owing was paid in full.
Id. at 625.

And the court concluded,

[g]iven plaintiff’s clear obligation under the contingency-fee agreement to
pay [her attorney] the fee, as well as the instant Order of the Court finding
the fee to be reasonable and, as set forth below, directing plaintiff to pay
the balance owing to [her attorney]. I expect full compliance by plaintiff.
Id.
Accordingly, the Court authorizes the petitioner to receive, as a fee for services
rendered before this Court, the sum of $13,278.75, which, when added to the $6,000.00
the petitioner has received from the Administration, represents 25% of the total of
past-due benefits awarded to the plaintiff.

Upon receipt of this money, the petitioner

must then, of course, refund to the claimant the smaller attorney-fee award made in this
case.

See Gisbrecht, 535 U.S. at 796 (“Congress harmonized fees payable by the

Government under EAJA with fees payable under § 406(b) out of claimant’s past-due
Social Security benefits in this manner:

Fee awards may be made under both

prescriptions, but the claimant’s attorney must ‘refun[d] to the claimant the amount of
the smaller fee.’”); see also Watford, 756 F.2d at 1566 n.5 (“[N]o ‘double recovery’ is
permitted, and any award received by the claimant’s counsel under the EAJA for work
done in court must be used to reimburse the claimant up to any amount previously
awarded under 42 U.S.C. § 406(b)(1) for counsel’s services in court.”).
Conclusion
The Court ORDERS that the petitioner receive as an attorney’s fee for services
rendered in this Court for the sum of $13,278.75 pursuant to 42 U.S.C. § 406(b).
6

Upon

receipt of this award, the petitioner is to refund to the plaintiff the smaller EAJA
attorney-fee award paid in this case ($1,800.00 (see Docs. 31 & 32)).
DONE and ORDERED this the 20th day of August, 2012.
s/WILLIAM E. CASSADY
UNITED STATES MAGISTRATE JUDGE

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