Kellogg v. Social Security Administration Commissioner

Filing 20

ORDER granting 18 Plaintiff's Motion for Attorney Fees. Signed by Senior Judge James A Teilborg on 9/17/2013.(VPB)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Vincent Kellogg,
No. CV 09-00982-PHX-JAT

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Plaintiff,

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v.

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Michael J. Astrue, Commissioner of
Social Security,

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ORDER

Defendant.

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Pending before the Court is Plaintiff’s Motion for Attorneys’ Fees (Doc. 18).

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Defendant has filed a response (Doc. 19).

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I.

BACKGROUND

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Plaintiff filed applications for a period of disability and disability insurance

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benefits under Title II of the Social Security Act on September 28, 2004. Plaintiff’s Title

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II application was denied initially and again on reconsideration.

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Plaintiff requested and was granted a hearing before an Administrative Law Judge

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(“ALJ”). The ALJ issued a Notice of Decision-Unfavorable denying Plaintiff’s claims on

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March 25, 2006.

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contingent-fee basis.

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Plaintiff’s claim with the Appeals Council and she submitted a brief on February 20, 2007.

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The Appeals Council denied review on March 11, 2009. On May 7, 2009, Plaintiff filed

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this action in federal court.

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On October 9, 2006, Plaintiff retained Plaintiff’s counsel on a
On October 19, 2006, Plaintiff’s counsel requested review of

Plaintiff filed his opening brief in this matter on September 11, 2009. (Doc. 11).

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On November 9, 2009, Defendant stipulated to remanding the case to the ALJ to hold a de

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novo hearing and issue a new decision regarding Plaintiff’s eligibility for disability

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insurance benefits. (Doc. 14). On November 10, 2009, the Court entered an order

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remanding this matter for further administrative proceedings and the Clerk of the Court

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entered judgment in this case. (Docs. 15 & 16).

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Upon remand, the ALJ held a supplemental hearing and issued a fully favorable

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decision on March 22, 2011. The Social Security Administration withheld $32,017.00,

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which represents 25% of the past-due benefits payable to Plaintiff, as required by Section

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206(a) of the Social Security Act for attorneys’ fees.

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On November 27, 2012, Plaintiff filed the pending motion for attorneys’ fees with

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the Court. (Doc. 18). Plaintiff’s counsel seeks $22,017.00 in attorneys’ fees pursuant to

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42 U.S.C. § 406(b). (Id. at 1). Defendant argues that more reasonable sums would be

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either $7,699.12 or $10,220.00. (Doc. 19).

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II.

ANALYSIS

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Section 406(b) provides that whenever the Court renders a favorable judgment to a

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social security claimant, the Court can award reasonable attorneys’ fees for representation

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of the claimant. 42 U.S.C. § 406(b)(1)(A). The reasonable fee cannot exceed twenty-five

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percent of the total past-due benefits awarded to the claimant. Id. The fee is payable out

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of, and not in addition to, the amount of the past-due benefits. Id. Section 406(b) “does

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not displace contingent-fee agreements as the primary means by which fees are set for

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successfully representing Social Security benefits claimants in court. Rather, § 406(b)

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calls for court review of such arrangements as an independent check, to assure that they

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yield reasonable results in particular cases.” Gisbrecht v. Barnhart, 535 U.S. 789, 807

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(2002).

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Agreements are unenforceable to the extent that they provide for fees exceeding 25

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percent of the past-due benefits.” Id. Therefore, the Court must ensure the fee is 1)

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reasonable, and 2) limited to 25% of past-due benefits.

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The Supreme Court noted that “Congress has provided one boundary line:

This Court must first “respect the primacy of lawful attorney-client fee
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agreements.” Crawford v. Astrue, 586 F.3d 1142, 1150 (9th Cir. 2009) (en banc) (internal

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quotations omitted). While looking first to this agreement, this Court must still test the

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resulting award for reasonableness. Id. at 1149. In other words, “the district court must

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first look to the fee agreement and then adjust downward if the attorney provided

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substandard representation or delayed the case, or if the requested fee would result in a

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windfall.” Id. at 11511. In considering reasonableness this Court should consider the

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following non-exhaustive factors: the character of the representation, the results achieved,

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performance, delay, whether the benefits were proportionate to the time spent on the case,

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and, as an aid if necessary, the lodestar calculation. Id.

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Plaintiff and his counsel had a contingent-fee agreement in this case typical of fee

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agreements in disability benefit cases.

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Plaintiff’s counsel’s fee shall equal twenty-five percent of all past-due benefits awarded to

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Plaintiff and Plaintiff’s family. (Doc. 18-4). Twenty-five percent of the total amount of

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past-due benefits awarded to Plaintiff and others as a result of the judgment in his favor is

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$32,017.00.

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$22,017.00.

The contingent-fee agreement provides that

Plaintiff's counsel seeks an award of attorneys’ fees in the amount of

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The Commissioner objects to this amount because Plaintiff’s counsel worked 14.9

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hours on this matter, which represents a rate of $1,477.00 per hour. (Doc. 19 at 2). The

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Commissioner argues that the fee requested is unreasonable because this is an

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unreasonable hourly rate to be paid. (Id.).

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Plaintiff has established that the fee is less than 25% of past-due benefits. Turning

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to the factors outlined in Crawford, the Court finds the fee requested by Plaintiff,

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however, is unreasonable. The only relevant factor to this determination is whether the

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benefits were proportionate to the time spent on the case. If the “benefits are large in

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comparison to the amount of time counsel spent on the case, a downward adjustment is . .

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. in order.” Gisbrecht, 535 U.S. at 808.

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“In the event the court chooses not to give effect to the terms of the agreement, it should
state for the record the deduction being made and the reasons therefor[ ].” Crawford, 586
F.3d at 1151 (quoting Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989) (en banc)).
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The Court recognizes that counsel’s fee is under a contingent-fee agreement and as

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such Plaintiff’s counsel bore the risk of an unfavorable decision. Plaintiff’s counsel avers

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that the prevailing non-contingent rate in the Phoenix market is $250.00 per hour. (Doc.

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18 at 12). The rate in a contingent-fee agreement will justifiably be higher. The question

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is how much higher.

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Under similar circumstances, in Hires v. Commissioner of Social Security

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Administration and Loveless v. Astrue, other judges in this Court have found attorneys’

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fees requests equating to rates of $1,073.47 and $1,043.77 per hour respectively were

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unreasonable for no other reason than the excessive hourly rate these fees represented.

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See Hires v. Comm’r of Soc. Sec. Admin., CV-08-2037-PHX-FJM, 2010 WL 2720821, at

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*2 (D. Ariz. July 9, 2010) (finding $300.00 per hour rate was reasonable); Loveless v.

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Astrue, 2:09-CV-00830 JWS, 2012 WL 1190823, at *2 (D. Ariz. Apr. 10, 2012) (finding

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that an almost $700 per hour rate was high but still reasonable); see also Hearn v.

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Barnhart, 262 F. Supp. 2d 1033, 1036 (N.D. Cal. 2003) (awarding counsel nearly three

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times the amount of his normal hourly rate); Grunseich v. Barnhart, 439 F.Supp.2d 1032,

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1035 (C.D. Cal. 2006) (awarding hourly rate of $600); contra, Hodges–Williams v.

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Barnhart, 400 F. Supp. 2d 1093, 1099 (D. Ill. 2005) (contingency fee award which “would

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amount to an hourly rate of more than $1,000 per hour” is unreasonable).

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In this case, the Court concludes that Plaintiff’s requested rate of $1,477.00 per

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hour for 14.9 hours of work is excessive and therefore unreasonable. To give adequate

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consideration to the risk that Plaintiff’s counsel took in undertaking the contingent fee

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arrangement, the Court concludes that an award of $11,175.00 is appropriate.

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represents an hourly rate of $750—three times higher than the non-contingent fee rate—

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and accounts for the risk that Plaintiff’s counsel took, counsel’s experience in the field,

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and the favorable disposition of Plaintiff’s claim.

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III.

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//

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//

CONCLUSION

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This

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Based on the foregoing,

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IT IS ORDERED that Plaintiff’s Motion for an Award of Attorneys’ Fees Under

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42 U.S.C. § 406(b) (Doc. 18) is granted. Counsel’s fees are approved in the amount of

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$11,175.00.

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Dated this 17th day of September, 2013.

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