Hay v. Commissioner of Social Security

Filing 37

ORDER signed by Magistrate Judge Edmund F. Brennan on 12/9/2022 GRANTING in PART 33 Motion for Attorney Fees. The court APPROVES a total fee award to plaintiff's counsel in the amount of $55,664.24. The Commissioner shall pay plaintiff� 39;s counsel the $45,997.12 available in plaintiff's withholding account. The remainder of $9,667.12 is due to plaintiff's counsel under the fee contract with plaintiff, and Plaintiff's counsel shall refund plaintiff the $22,951.26 previously awarded under the EAJA. (Reader, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ZAK FRANKLIN HAY,

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Plaintiff,

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No. 2:18-cv-01706-EFB (SS)

v.

ORDER

KILOLO KIJAKAZI, Commissioner of
Social Security,
Defendant.

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Pursuant to 42 U.S.C. § 406(b), counsel for plaintiff in the above-entitled action seeks an

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award of attorney fees in the amount of $83,496.37. ECF No. 33. Plaintiff previously entered

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into a retainer agreement with his attorney providing that he would pay counsel 25 percent of any

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past-due benefits won as a result of the appeal in this case. ECF No. 33-4. Here, the amount

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requested is more than 25 percent of the past due benefits plaintiff was documented as receiving,

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and also more than the amount remaining in plaintiff’s Social Security Administration (SSA)

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withholding account. For the reasons set forth below, the motion of fees is granted in part and

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denied in part.

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42 U.S.C. § 406(b)(1)(A) provides, in relevant part:

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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.

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Rather than being paid by the government, fees under the Social Security Act are awarded

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out of the claimant’s disability benefits. Russell v. Sullivan, 930 F.2d 1443, 1446 (9th Cir. 1991),

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receded from on other grounds, Sorenson v. Mink, 239 F.3d 1140, 1149 (9th Cir. 1991).

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However, the 25 percent statutory maximum fee is not an automatic entitlement; the court also

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must ensure that the requested fee is reasonable. Gisbrecht v. Barnhart, 535 U.S. 789, 808-09

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(2002) (“We hold that § 406(b) does not displace contingent-fee agreements within the statutory

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ceiling; instead, § 406(b) instructs courts to review for reasonableness fees yielded by those

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agreements.”). “Within the 25 percent boundary . . . the attorney for the successful claimant must

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show that the fee sought is reasonable for the services rendered.” Id. at 807. A “court may

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properly reduce the fee for substandard performance, delay, or benefits that are not in proportion

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to the time spent on the case.” Crawford v. Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009) (en

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banc).

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Plaintiff’s attorney represented him in two federal cases. In 2012, plaintiff applied for

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Title II benefits, alleging disability as of November 2007. The ALJ issued an unfavorable

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decision in 2013. ECF No. 9 (Administrative Record (“AR”)) 148-165. Plaintiff’s attorney

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represented him in the subsequent action for district court review, Hay v. Colvin, Case No. 2:15-

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cv-02049 EFB, which resulted in a remand for further proceedings. Id., ECF No. 20. In 2015,

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the ALJ issued a second unfavorable decision. AR 10-22. Plaintiff’s counsel then represented

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him in the instant federal action. ECF No. 1. In 2020, this court granted summary judgment for

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plaintiff and again remanded for further proceedings. ECF No. 23. In the second round of

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remand proceedings, plaintiff was found disabled, resulting in an award of past-due benefits. AR

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151-160.

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Plaintiff’s counsel asserts that, between the two federal cases, he spent over 150 hours of

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attorney time. ECF No. 33-1 (Weems Decl., ¶ 6); see ECF Nos. 33-5 & 33-6 (invoices). In

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defendant’s response to the fee motion, defendant calculates that plaintiff’s attorney spent 18.1

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hours on the first case and 101.9 hours on the instant case, for a total of approximately 120 hours.

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ECF No. 35, citing ECF Nos. 33-5 & 33-6.

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Plaintiff’s November 6, 2021 “Notice of Award” letter stated that his total past-due

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benefit amount was $222,657.00. ECF No. 33-2 at 5. It further stated that the SSA had withheld

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$55,664.24 (25 percent) of that amount in order to pay any attorney fees on plaintiff’s behalf. Id.

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On May 23, 2022, SSA sent plaintiff an “Important Information” letter indicating that only

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$45,997.12 remained in plaintiff’s withholding account, as a portion of the withheld funds were

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used to satisfy an attorney fee award under § 406(a). ECF No. 33-3; see ECF No. 33 at 6.

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Plaintiff’s attorney asserts that, because plaintiff has minor children, an additional

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auxiliary disability insurance benefit of $111,328.50 is due to plaintiff under agency regulations,

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bringing the total past-due benefits award to plaintiff and his family to $333,985.50. ECF No. 33

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at 6. Plaintiff’s attorney contends that a fee award of $83,496.37, or 25 percent of this amount, is

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due to him under the fee agreement. ECF No. 33 at 7. In response, defendant notes that

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plaintiff’s counsel “did not include any letters indicating any such award. Counsel for Defendant

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was unable to independently obtain any such documents, nor did he find any indication that

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plaintiff’s benefits included child’s benefits as well.” ECF No. 35 at 4. \\\Defendant contends

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that plaintiff’s past-due benefits are accurately reflected as $222,657.00, as set forth in the Notice

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of Award letter, and the court finds this persuasive. As indicated in the letter, 25 percent of this

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amount is $55,664.24. Assuming plaintiff’s counsel spent 120 hours litigating the two cases, the

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effective hourly rate for attorney time sought by counsel is $463.87 (see ECF No. 35 at 5) which

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the court finds reasonable under the circumstances presented here.

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Counsel did not delay these proceedings, and his representation of plaintiff was not

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substandard. Indeed, he successfully represented his client’s interests before this court. Based on

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the risk of loss taken in representing plaintiff, counsel’s experience in the field of Social Security

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law, and the results achieved in this case, the court finds that fee request is reasonable. See De
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Vivo v. Berryhill, No. 1:15-cv-1332-EPG, 2018 WL 4262007 (E.D. Cal. Sept. 6, 2018) (awarding

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fees at effective hourly range of $1,116.26); Jamieson v. Astrue, No. 1:09cv0490 LJO DLB,

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2011 WL 587096 (E.D. Cal. Feb. 9, 2011) (finding fee at effective hourly rate of $1,169.49

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reasonable); Naddour v. Colvin, No.: 13-CV-1407-BAS, 2016 WL 4248557 (S.D. Cal. Aug. 11,

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2016) (awarding fee at effective hourly rate of $1,063); Kazanjian v. Astrue, No. 09 civ. 3678

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(BMC), 2011 WL 2847439, at *1-2 (E.D.N.Y. July 15, 2011) (finding that counsel “performed

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well, diligently, and with unusual efficiency,” and awarding fee at hourly rate of $2,100).

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Based on the foregoing, plaintiff’s attorney is entitled to $55,664.24 under the fee

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agreement with plaintiff. However, as noted above, only $45,997.12 remains in plaintiff’s SSA

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withholding account. The Commissioner typically withholds a total of 25 percent of past-due

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benefits from which to pay attorney fees under § 406(a) and § 406(b). See 42 U.S.C. §§

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406(a)(4), (b)(1)(A); Culbertson v. Berryhill, 139 S. Ct. 517, 523 (2019) (noting that the agency

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has a discretionary policy of withholding “only one pool of 25% of past-due benefits” to pay

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attorney fees under both § 406(a) and § 406(b), and thus the Commissioner's direct payment of

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fees to the attorney out of the past-due benefits “could be less than the fees to which the attorney

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is entitled”). “[I]f the amount of past-due benefits withheld is insufficient to cover all fees

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awarded at the administrative and court levels, the claimant’s counsel must recover the difference

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from the claimant.” Dobson v. Commissioner, No. 2:09–cv–1460–KJN, 2013 WL 6198185, *3

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(E.D. Cal. Nov. 27, 2013). Thus, the court will order the Commissioner to pay plaintiff’s counsel

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the $45,997.12 in plaintiff’s withholding account, with plaintiff to pay the remaining $9,667.12

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owing to counsel under the contingency fee contract.

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Finally, plaintiff’s counsel acknowledges that the award must be offset by the fees

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previously awarded under the Equal Access to Justice Act (“EAJA”). Plaintiff’s counsel notes

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that, between the two actions on plaintiff’s behalf, he has received $22,951.26 in EAJA fees. 1

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ECF No. 33 at 6; see ECF No. 32 (awarding $18,801.75 in EAJA fees in instant action); Hay v.

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Defendant’s brief refers to $7,600.00 in EAJA fees, but this appears to be an error. ECF
No. 35 at 3, 6.
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Commissioner, No. 2:15-cv-02049 EFB, ECF No. 28 (awarding $4,149.41 in EAJA fees in

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previous action). Accordingly, the court will include in its ruling an order directing counsel to

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refund the EAJA fees previously awarded to plaintiff. See Gisbrecht v. Barnhart, 535 U.S. 789,

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796 (2002) (holding that where attorney’s fees are awarded under both EAJA and § 406(b), the

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attorney must refund the smaller of the two awards to the plaintiff). 2

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Accordingly, it is hereby ORDERED that plaintiff’s counsel’s motion for attorney’s fees
(ECF No. 33) is granted in part, as follows:
1. The court approves a total fee award to plaintiff’s counsel in the amount of

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$55,664.24;
2. The Commissioner shall pay plaintiff’s counsel the $45,997.12 available in plaintiff’s

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withholding account;
3. The remainder of $9,667.12 is due to plaintiff’s counsel under the fee contract with

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plaintiff; and
4. Plaintiff’s counsel shall refund plaintiff the $22,951.26 previously awarded under the

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EAJA.

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Dated: December 9, 2022.

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The court declines counsel’s request for a net fee award. See Crawford v., Astrue, 586
F.3d 1142 at 1144 n.3 (9th Cir. 2009) (“A district court may award fees under both the EAJA and
42 U.S.C. § 406(b), but the claimant’s attorney must refund to the claimant the amount of the
smaller fee.”) (internal quotations omitted) (emphasis added); Martinez v. Saul, 2021 WL
535404, *4 (E.D. Cal. Feb. 12, 2012) (declining to award net fee and discussing issue).
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