Rhoades v. Commissioner of Social Security

Filing 29

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Kendall J. Newman on 10/15/2020 RECOMMENDING that Counsel's 25 Motion for Attorney Fees be granted in part. The Commissioner shall pay counsel in this case the sum of $14,047.41 in attorneys' fees under 42 U.S.C. § 406(b). Plaintiff's counsel shall reimburse plaintiff $6,900.00 in previously awarded EAJA fees. Motion referred to Judge John A. Mendez. Objections to F&R due within 14 days. (Zignago, K.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 JEFFREY R. RHOADES, 12 Plaintiff, 13 v. 14 No. 2:18-cv-1264-JAM KJN FINDINGS AND RECOMMENDATIONS (ECF No. 25.) COMMISSIONER OF SOCIAL SECURITY, 15 Defendant. 16 Presently pending before the court is counsel for plaintiff John David Metsker’s motion 17 18 for attorneys’ fees pursuant to 42 U.S.C. § 406(b), filed on October 7, 2020. (ECF No. 25.)1 19 Plaintiff’s counsel seeks an award of $14,047.41 (25% of plaintiff’s past due benefits of 20 $56,189.64 as calculated by the Commissioner of Social Security.) The Commissioner filed a 21 response to counsel’s motion pursuant to its role as trustee. (ECF No. 28.) The Commissioner 22 took no position on the reasonableness of the fee, but asserted that the EAJA fee previously paid 23 to plaintiff’s counsel should be refunded to plaintiff (and not offset, as counsel requested.) The court grants the motion for attorneys’ fees in part under 42 U.S.C. § 406(b). 24 25 /// 26 /// 27 28 1 This case was referred to the undersigned pursuant to E.D. Cal. L.R. 302(c)(15) for the entry of findings and recommendations. (ECF Nos. 7, 9.) 1 1 BACKGROUND 2 The facts and procedural history of this case were extensively outlined in the court’s 3 previous orders and need not be repeated here. (See ECF No. 19.) Briefly stated, on July 11, 4 2019, the court recommended the matter be remanded under sentence four of 42 U.S.C. § 405(g). 5 (Id.) The district court adopted the findings in full. (ECF No. 20.) 6 Subsequently, on October 28, 2019, the parties stipulated to an award for attorney’s fees 7 under the Equal Access to Justice Act (“EAJA”). (ECF No. 22.) The court recommended 8 granting the stipulated fee, and the district court again adopted the recommendations in full. 9 (ECF No. 23, 24.) On October 7, 2020, plaintiff’s counsel filed the instant motion for attorneys’ 10 fees under 42 U.S.C. § 406(b), asserting that after remand, plaintiff received a favorable decision 11 and award for benefits. (See ECF No. 25.) The Commissioner filed a response. (ECF No. 29.) 12 DISCUSSION 13 Title 42 U.S.C. § 406(b) provides, in part, that: 14 15 16 17 18 19 20 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 determine and allow as part of its judgment a reasonable fee for such 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 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. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph. 21 42 U.S.C. § 406(b)(1)(A). Unlike fee-shifting provisions where the losing party is responsible for 22 attorneys’ fees, the attorneys’ fees provision in 42 U.S.C. § 406(b) is paid by the claimant out of 23 the past-due benefits awarded. Gisbrecht v. Barnhart, 535 U.S. 789, 802 (2002). 24 The Commissioner typically does not act as an adversary, but instead as an adviser to the 25 court with respect to fee requests under 42 U.S.C. § 406(b). Crawford v. Astrue, 586 F.3d 1142, 26 1144 n. 2 (9th Cir. 2009) (en banc) (“The Commissioner plays a part in the fee determination 27 resembling that of a trustee for the claimants.”). However, “[b]ecause the [Commissioner] has no 28 direct interest in how much of the award goes to counsel and how much to the disabled person, 2 1 the district court has an affirmative duty to assure that the reasonableness of the fee is 2 established.” Crawford, 586 F.3d at 1149. 3 In Crawford, the Ninth Circuit Court of Appeals extensively discussed how the 4 reasonableness of the fee within the 25% cap is to be determined. The court noted that although 5 the Ninth Circuit had previously utilized the lodestar method to determine the reasonableness of 6 fees under 42 U.S.C. § 406(b), i.e., “by multiplying the reasonable hourly rate by the number of 7 hours reasonably expended on the case” with consideration of possible enhancements, the 8 approach changed after the United States Supreme Court’s decision in Gisbrecht v. Barnhart, 535 9 U.S. 789 (2002). Crawford, 586 F.3d at 1148. The Ninth Circuit observed that: 10 11 12 13 14 15 16 17 18 19 20 21 22 In Gisbrecht, the Supreme Court flatly rejected our lodestar approach. The court explained that we had “erroneously read § 406(b) to override customary attorney-client contingent-fee agreements” when we approved the use of the lodestar to determine a reasonable fee, Gisbrecht, 535 U.S. at 808-09. The Court held that a district court charged with determining a reasonable fee award under § 406(b)(1)(A) must respect “the primacy of lawful attorney-client fee agreements,” id. at 793, “looking first to the contingent-fee agreement, then testing it for reasonableness,” id. at 808. The Court noted that courts that had followed this model had “appropriately reduced the attorney’s recovery based on the character of the representation and the results the representative achieved.” Id. A fee resulting from a contingent-fee agreement is unreasonable, and thus subject to reduction by the court, if the attorney provided substandard representation or engaged in dilatory conduct in order to increase the accrued amount of past-due benefits, or if the “benefits are large in comparison to the amount of time counsel spent on the case.” Id. “[A]s an aid to the court’s assessment of the reasonableness of the fee yielded by the fee agreement,” but “not as a basis for satellite litigation,” the court may require counsel to provide a record of the hours worked and counsel’s regular hourly billing charge for noncontingent cases. Id. The attorney bears the burden of establishing that the fee sought is reasonable. Id. at 807. 23 Id. Thus, performance of the district court’s duty to assure reasonableness of the fee “must begin, 24 under Gisbrecht, with the fee agreement, and the question is whether the amount need be reduced, 25 not whether the lodestar amount should be enhanced.” Id. at 1149, 1151 (“the district court must 26 first look to the fee agreement and then adjust downward if the attorney provided substandard 27 representation or delayed the case, or if the requested fee would result in a windfall”). 28 3 In support of his motion for attorneys’ fees under 42 U.S.C. § 406(b), plaintiff’s counsel 1 2 attached an attorney-client agreement, which provided for a contingent fee of 25% of any past 3 due benefits awarded in plaintiff’s case pursuant to 42 U.S.C. § 406(b). (ECF No. 25-1.) In light 4 of the guidance provided in Crawford, the court finds plaintiff’s counsel’s fee request to be 5 reasonable. As an initial matter, agreements providing for fees of 25% of past due benefits are 6 the “most common fee arrangement between attorneys and Social Security claimants.” Crawford, 7 586 F.3d at 1147. Additionally, the undersigned does not find any indication that plaintiff’s 8 counsel performed substandard work or unduly delayed the case; to the contrary, plaintiff’s 9 counsel’s work over several years ultimately resulted in a fully favorable decision for plaintiff 10 and an award of back benefits. Furthermore, the total amount sought ($14,047.41) does not 11 appear to be disproportionate to the amount of time plaintiff’s counsel spent on the case. In his 12 briefing, plaintiff’s counsel suggests that he spent approximately 38.2 hours on the case, which 13 equates to a rate of approximately $368 per hour. It is important to note that plaintiff’s counsel 14 also assumed the risk of receiving no compensation, as plaintiff’s application was denied in full at 15 the administrative level. (ECF No. 14.) The court finds that the fee amount requested is 16 reasonable in light of the several years of litigation and the result achieved, and cannot be said to 17 amount to a windfall to plaintiff’s counsel. Finally, the court notes the Commissioner’s assertion that Section 406(b) mandates the 18 19 refund of the lesser of the EAJA and 406(b) fees, and does not allow for an offset as counsel 20 requests. (See ECF No. 28 at 4-8.) The court concurs, and will recommend payment of the 21 406(b) fees to counsel and refund to plaintiff of the EAJA award, and not a single payment to 22 counsel with an offset. Gisbrecht, 535 U.S. at 796 (“Fee awards may be made under both 23 prescriptions, but the claimant's attorney must refund to the claimant the amount of the smaller 24 fee.”). 25 RECOMMENDATIONS 26 Accordingly, IT IS HEREBY RECOMMENDED that: 27 28 1. Counsel’s motion for attorney’s fees under 42 U.S.C. § 406(b) (ECF No. 25) is GRANTED IN PART; 4 1 2. The Commissioner shall pay counsel in this case the sum of $14,047.41 in attorneys’ fees 2 3 under 42 U.S.C. § 406(b); and 3. Plaintiff’s counsel shall reimburse plaintiff $6,900.00 in previously awarded EAJA fees. 4 These findings and recommendations will be submitted to the United States District Judge 5 assigned to the case, pursuant to 28 U.S.C. § 636(b)(1). Within fourteen (14) days after being 6 served with these findings and recommendations, Plaintiff may file written objections with the 7 Court. The document should be captioned “Objections to Magistrate Judge’s Findings and 8 Recommendation.” Plaintiff is advised that failure to file objections within the specified time 9 frame may result in the waiver of the “right to challenge the magistrate’s factual findings” on 10 appeal. Wilkerson v. Wheeler, 722 F.3d 834, 839 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 11 F.2d 1391, 1394 (9th Cir. 1991)). 12 Dated: October 15, 2020 13 14 15 rhoa.1264 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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