Gurzenda v. Berryhill

Filing 42

Order by Chief Magistrate Judge Joseph C. Spero granting 39 Motion for Attorney's Fees. (jcslc2S, COURT STAFF) (Filed on 9/9/2020)

Case 3:18-cv-00488-JCS Document 42 Filed 09/09/20 Page 1 of 7

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ANGELINA GURZENDA,

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Plaintiff,

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v.

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ANDREW SAUL,

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Defendant.

United States District Court
Northern District of California

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Case No. 18-cv-0488-JCS
ORDER REGARDING MOTIONS FOR
ATTORNEY’S FEES
Re: Dkt. Nos. 39

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I.

INTRODUCTION
Plaintiff Angelina Gurzenda brought this action seeking review of the final decision of

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Defendant Andrew M. Saul, Commissioner of the Social Security Administration (the

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“Commissioner”) denying her application for supplemental security income under Title XVI of the

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Social Security Act. In a September 25, 2019 order, the Court reversed the decision of the

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Commissioner and remanded for further proceedings. The Social Security Administration later

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awarded Gurzenda past due benefits. Gurzenda’s counsel, Josephine Gerrard, now moves for an

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award of attorney’s fees under 42 U.S.C. § 406(b) and the fee agreement between her and

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Gurzenda. For the reasons stated below, the Court GRANTS the motion.1

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II.

BACKGROUND
On January 16, 2018, Gurzenda entered into a contingency-based fee agreement (the “Fee

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Agreement”) with Gerrard, appointing Gerrard as her counsel for her appeal from the prior

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administrative denial of her claims. Fees Mot. (dkt. 39) Ex. B. The Fee Agreement grants Gerrard

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“the right . . . to ask the court to award as much as 25% of [Gurzenda’s] past-due benefits,” and

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The parties have consented to the jurisdiction of the undersigned magistrate judge for all
purposes pursuant to 28 U.S.C. § 636(c).

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provides that “[i]f the court awards an attorney fee out of any past-due benefits and also awards an

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[Equal Access to Justice Act (‘EAJA’)] fee for that same work, [Gurzenda] will be refunded or

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credit with the amount of the smaller fee.” Id. On September 25, 2019, the Court granted

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Gurzenda’s motion for summary judgment, reversing the administrative law judge’s prior denial

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of benefits and remanding the matter for further administrative proceedings. See S.J. Order (dkt.

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34).2 The Court awarded Gurzenda $6,750 in attorney’s fees under the EAJA, 28 U.S.C.

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§ 2412(d), based on the stipulation of the parties. Dkts. 36, 38. On February 4, 2020, the Social

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Security Administration issued an award letter granting Gurzenda $39,365 in past due benefits.

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Fees Mot. Ex. A.
Gerrard now requests that the Court award attorney’s fees of $3,091 pursuant to 42 U.S.C.

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United States District Court
Northern District of California

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§ 406(b)(1). Fees Mot. at 1, 4. Gerrard contends that this fee is reasonable because it equals the

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difference between the maximum § 406(b)(1) fee of $9,841 (twenty-five percent of Gurzenda’s

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back-benefits award, apparently rounding off the additional twenty-five cents that result from a

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precise calculation) and the EAJA award of $6,750. Id. at 4. Under Gerrard’s proposed award,

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Gurzenda’s remaining past due benefits would equal $36,274, which is the difference between the

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$39,365 full award and $3,091 in requested attorney’s fees.
In a response to the motion—offered in the Commissioner’s role “‘resembling that of a

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trustee,’” without taking a position on the reasonableness of Gerrard’s request—the Commissioner

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argues that Gerrard’s request is “terribly confusing,” as compared to the more typical practice in

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which an attorney seeks the full amount authorized under the applicable fee agreement and

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§ 406(b)(1) and the Court orders the return of any EAJA fees to the plaintiff. Comm’r’s Response

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(dkt. 40) at 3–4 (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 808–09 (2002)). Specifically, the

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Commissioner argues that under Gerrard’s proposed award, Gurzenda would not receive the

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$6,750 EAJA award. Id. at 4. As such, the Commissioner asserts that the Court should award

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Gerrard a gross fee of $9,841.25, comprising 25% of Gurzenda’s award of past-due benefits, and

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order Gerard to return the $6,750 EAJA award to Gurzenda. Id. at 4–5. After refunding Gurzenda

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the $6,750 EAJA award, the net fee payable to Gerrard would be $3,091.25, with Gurzenda

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Gurzenda v. Saul, No. 18-cv-00488-JCS, 2019 WL 4674377 (N.D. Cal. Sept. 25, 2019).
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retaining $36,273.75. Id.

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III.

ANALYSIS
A.

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“Whenever a court renders a judgment favorable to a claimant under this subchapter who

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was represented before the court by an attorney, the court may determine and allow as part of its

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judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the

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past-due benefits to which the claimant is entitled by reason of such judgment, and the

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Commissioner of Social Security may . . . certify the amount of such fee for payment to such

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attorney out of, and not in addition to, the amount of such past-due benefits.” 42 U.S.C. § 406(b).

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Courts must “review for reasonableness” fees sought under this statute, and may reduce an award

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United States District Court
Northern District of California

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of fees below the statutory ceiling based on factors including “the character of the representation,”

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“the results the representative achieved,” an attorney’s responsibility for delay (which must be

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addressed “so that the attorney will not profit from the accumulation of benefits during the

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pendency of the case in court”), and whether the “benefits are large in comparison to the amount

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of time counsel spent on the case” (which “may require the claimant’s attorney to submit . . . a

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record of the hours spent representing the claimant and a statement of the lawyer’s normal hourly

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billing charge for noncontingent-fee cases”). Gisbrecht, 535 U.S. at 808–09; see also Crawford v.

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Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009) (“The court may properly reduce the fee for

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substandard performance, delay, or benefits that are not in proportion to the time spent on the

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case.”). In conducting that inquiry, courts must “respect the ‘primacy of lawful attorney-client fee

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agreements.’” Crawford, 586 F.3d at 1150 (quoting Gisbrecht, 535 U.S. at 1150).

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Legal Standard for Social Security Attorney’s Fees

In addition to the fees permitted under § 406(b), the EAJA, enacted in 1980, allows a party

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who prevails against the United States in court, including a successful Social Security benefits

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claimant, to receive an award of fees payable by the United States if the government’s position in

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the litigation was not “substantially justified.” Gisbrecht, 535 U.S. at 796 (citing 28 U.S.C.

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§ 2412(d)(1)(A)). The burden of proving the substantial justification exception to the mandatory

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award of fees under the EAJA lies with the government. Love v. Reilly, 924 F.2d 1492, 1495 (9th

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Cir. 1991). In contrast to fees awarded under § 406(b), EAJA fees are based on the “time
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expended” and the attorney’s billing rate. 28 U.S.C. § 2412(d)(1)(B). The EAJA authorizes an

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award of only “reasonable” attorneys’ fees, and caps the rate at which fees can be awarded at $125

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per hour, except that a court may authorize a higher rate based on special circumstances or an

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increase in the cost of living. 28 U.S.C. § 2412(d)(2)(A). The Ninth Circuit has authorized a cost

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of living adjustment based on the “CPI-U” consumer price index. Thangaraja v. Gonzales, 428

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F.3d 870, 876 (9th Cir. 2005).
“Congress harmonized fees payable by the Government under EAJA with fees payable

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under § 406(b) out of the claimant’s past-due Social Security benefits in this manner: Fee awards

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may be made under both prescriptions, but the claimant’s attorney must ‘refun[d] to the claimant

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the amount of the smaller fee.’” Gisbrecht, 535 U.S. at 796 (quoting Act of Aug. 5, 1985, Pub. L.

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United States District Court
Northern District of California

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No. 99-80, § 3, 99 Stat. 186 (1985)) (alteration in original). Accordingly, “an EAJA award offsets

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an award under Section 406(b),” increasing “the amount of the total past-due benefits the claimant

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actually receives . . . up to the point the claimant receives 100 percent of the past-due benefits.”

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Id. (citation, brackets, and internal quotation marks omitted).

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B.

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Here, Gerrard seeks an award of $3,091.25 in attorney’s fees, which amounts to twenty-

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five percent of Gurzenda’s total award of past due benefits less the EAJA award of $6,750. See

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Fees Mot. at 4. In response, the Commissioner asserts that it is “unclear whether [Gerrard] was

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aware” that she owed Gurzenda the EAJA award and that her calculation was “confusing.”

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Comm’r’s Response at 3, 5. Based on Gerrard’s proposed calculation, however, it is clear that

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she was aware of the requirement, as her calculation directly took the required refund into

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account.

Authorized Attorney’s Fees Under 42 U.S.C. § 406(b)

The competing proposals offered by Gerrard and the Commissioner result in the same

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outcome.3 The Commissioner proposes that Gerrard should have requested the full §406(b) fee of

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$9,841, leaving Gurzenda with $29,524. Next, the Commissioner’s calculation necessitates that

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Gerrard returns to Gurzenda the $6,750 EAJA award that Gerrard previously recovered from the

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For consistency with Gerrard’s proposal, the Court also rounds the Commissioner’s proposal to
the nearest whole dollar, which results in a twenty-five cent benefit to Gurzenda over Gerrard.
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Commissioner. The final result of the Commissioner’s proposed calculation leaves Gurzenda with

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a net benefits payment of $36,274 and Gerrard with a total fee of $9,841. Gerrard’s calculation

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combines the Commissioner’s first and second steps, resulting in a single transaction and no need

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for a refund from Gerrard to Gurzenda. Under either calculation, Gurzenda receives $36,274 in

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past due benefits and Gerrard receives $9,841 in attorney’s fees.

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Gerrard’s fee can be viewed alternatively as either: (1) the $6,750 EAJA award she

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previously received from the Commissioner plus $3,091 awarded under § 406(b) out of

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Gurzenda’s benefits; or (2) a $9,841 award under § 406(b) out of Gurzenda’s benefits, with the

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EAJA award from the Commissioner going instead to Gurzenda. Under either framework,
though, each party receives the same amount. While Gerrard’s plan adds some complication in

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United States District Court
Northern District of California

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that it differs from the usual practice described in Gisbrecht and has prompted the Commissioner’s

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quasi-objection in response, it also simplifies the process by directing all funds to the appropriate

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recipient in the first instance, without need to order a refund from Gerrard to Gurzenda.

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The question remains whether Gerrard’s approach is permissible under the parties’ fee

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agreement and applicable statutes. The fee agreement provides that if the Court awards fees both

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under the EAJA and out of Gurzenda’s benefits under § 406(b), Gurzenda “will be refunded or

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credited with the amount of the smaller fee.” Fees Mot. Ex. B at 2. Gerrard’s proposal satisfies

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that provision in that Gurzenda would be “credited” with the amount of the EAJA fee as a result of

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Gerrard receiving only $3,091—and not the full twenty-five percent, or $9,841—from Gurzenda’s

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past-due benefits.

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As for the statutory scheme, § 406(b)(1)(A) provides that when any fees are awarded

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thereunder, “no other fee may be payable or certified for payment for such representation except

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as provided in this paragraph.” 42 U.S.C. § 406(b)(1)(A). To prevent that clause prohibiting an

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award of fees under the EAJA, or allowing such an award to serve as a windfall to counsel rather

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than offsetting the fees that a claimant must pay under § 406(b), Congress has provided that

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section 406(b)(1)’s prohibition on other fees “shall not apply with respect to any [EAJA] award

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but only if, where the claimant’s attorney receives fees for the same work under both [§ 406(b)]

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and [the EAJA], the claimant’s attorney refunds to the claimant the amount of the smaller fee.”
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Pub. L. No. 96-491, § 206 (Oct. 21, 1980), as modified by Pub. L. No. 99–80, § 3 (Aug. 5, 1985).

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As the Supreme Court noted in Gisbrecht, when fees are available under both statutes, the

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claimant’s attorney typically receives both awards, and refunds the smaller award to the claimant.

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535 U.S. at 796. Neither party has cited any case considering whether Gerrard’s approach is also

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permissible. As Gerrard notes in her reply, however, by explicitly subtracting the prior EAJA

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award from the twenty-five percent fee allowed under her fee agreement and § 406(b), the

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remaining $3,091 does not account for the “same work” as the EAJA award. In the alternative, the

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deduction could also be construed as a “refund,” as contemplated by Congress in harmonizing the

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two fee statutes. The Court therefore concludes that Gerrard’s approach of deducting the earlier
EAJA award from the amount she would otherwise be entitled to receive under § 406(b) is

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United States District Court
Northern District of California

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permissible, albeit unorthodox.4
The Court also concludes that Gerrard’s total fees of $9,841—combining the EAJA award

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with the amount she seeks under § 406(b)—are reasonable. A court’s review of reasonableness

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under § 406(b) must “respect the ‘primacy of lawful attorney-client fee agreements.’” Crawford,

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586 F.3d at 1150 (quoting Gisbrecht, 535 U.S. at 1150). Gerrard spent 67.1 hours working on the

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case, Fees Mot. Ex. E, resulting in an effective rate of $146.66 per hour, which is modest even

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before taking into account the contingent nature of the representation. Although Gerrard required

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a number of deadline extensions, much of the delay was due to the complex history of Gurzenda’s

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multiple applications for disability benefits, and Gerrard ultimately obtained a favorable result for

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her client. The Court finds no basis to deviate from the terms of the fee agreement.

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IV.

CONCLUSION

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For the reasons stated above, the motion is GRANTED. Gurzenda’s counsel Josephine M.

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Gerrard may recover fees of $3,091 from Gurzenda’s past-due benefits, in additional to the $6,750

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that Gerrard already received under the EAJA. The Commissioner is ORDERED to disburse

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To avoid unnecessary confusion, Gerrard might consider in future cases using the typical
approach of requesting fees under both statutes and refunding the smaller amount to her client.
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Gurzenda’s past-due benefits in a manner consistent with this order.
IT IS SO ORDERED.
Dated: September 9, 2020
______________________________________
JOSEPH C. SPERO
Chief Magistrate Judge

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United States District Court
Northern District of California

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