Pizano v. Berryhill

Filing 37

ORDER by Magistrate Judge Virginia K. DeMarchi granting 35 Motion for Attorney's Fees. (vkdlc2S, COURT STAFF) (Filed on 7/24/2020)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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JUAN ANTONIO PIZANO,

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Plaintiff,

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ORDER GRANTING PLAINTIFF’S
COUNSEL’S MOTION FOR FEES

v.

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ANDREW M. SAUL,

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United States District Court
Northern District of California

Case No. 17-cv-03030-HRL

Re: Dkt. No. 35

Defendant.

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I.

BACKGROUND
In this Social Security appeal,1 the Court granted in part plaintiff Juan Antonio Pizano’s

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motion for summary judgment, remanded the case for further agency proceedings, and entered

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judgment accordingly. Dkt. Nos. 30, 31. The Court subsequently approved the parties’ stipulation

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for an award of attorney’s fees in the amount of $3,500 to Mr. Pizano’s counsel, Marc Kalagian,

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pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2142. Dkt. No. 34. On

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remand, the Social Security Administration concluded that Mr. Pizano is disabled within the

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meaning of the Social Security Act (“Act”) and awarded him $57,369 in past-due disability

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benefits. Dkt. No. 35 at ECF 11, ¶ 4, Dkt. No. 35-3; Dkt. No. 35-4 at ECF 1-2. The May 19, 2020

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Notice of Award informed Mr. Pizano that 25% of his past-due benefits, or $14,342.25, was being

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withheld in the event attorney’s fees were payable to Mr. Kalagian under the Act. Dkt. No. 35-4

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at ECF 2.
Mr. Kalagian now seeks $13,500, or approximately 23.5% of those past-due benefits

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Pursuant to Fed. R. Civ. P. 25(d), Andrew M. Saul is substituted for his predecessor, Nancy A.
Berryhill.

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pursuant to 42 U.S.C. § 406(b) and his fee agreement with Mr. Pizano, which provides for a

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contingent fee of 25% of Mr. Pizano’s past-due benefits. Dkt. No. 35; Dkt. No. 35-2. Mr.

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Kalagian acknowledges that he must reimburse Mr. Pizano for the previous $3,500 EAJA fee

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award, leaving a net fee award of $10,000.
The record indicates that Mr. Kalagian served his fees motion on Mr. Pizano by mail. Dkt.

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No. 35 at ECF 13. The government does not oppose the motion, but notes that it does not take a

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position on the reasonableness of the fees requested.2 Dkt. No. 36. The Court has not received

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any opposition or response from Mr. Pizano. The matter is deemed suitable for determination

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without oral argument. Civ. L.R. 7-1(b). Upon consideration of the moving and responding
papers, the Court grants the motion for fees.3

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United States District Court
Northern District of California

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II.

DISCUSSION
When a court renders judgment favorable to a claimant represented by an attorney, “the

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court may determine and allow as part of its judgment a reasonable fee for such representation, not

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in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by

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reason of such judgment[.]” 42 U.S.C. § 406(b)(1)(A). A court may award such fees even if the

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court’s judgment did not immediately result in an award of past-due benefits. Butler v. Colvin,

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No. 3:14-cv-02050-LB, 2017 WL 446290, at *1 (N.D. Cal. Feb. 2, 2017). Although a district

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court may award fees under both the EAJA and § 406(b), “‘the claimant’s attorney must refund to

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the claimant the amount of the smaller fee.’” Crawford v. Astrue, 586 F.3d 1142, 1144 n.3 (9th

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Cir. 2009) (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002)).

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“Attorneys specializing in social security work ‘routinely enter into contingent-fee

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agreements specifying that the fee will be 25% of any past-due benefits recovered, thus providing

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the attorney the statutory maximum of fees if the representation is successful.’” Mercado v. Saul,

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No. 16-cv-04200-BLF, 2020 WL 2512235, at *1 (N.D. Cal. May 15, 2020) (quoting Crawford,

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The government states that due to the COVID-19 pandemic, it was unable to send a hard copy of
its non-opposition to Mr. Pizano, but that Mr. Kalagian agreed to do so. Dkt. No. 36 at 1 n.2.
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This action was assigned, upon the consent of all parties, to Magistrate Judge Howard R. Lloyd,
who has since retired. The present motion has been referred to this Court for disposition.
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586 F.3d at 1147). Section 406(b) “does not displace contingent-fee agreements as the primary

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means by which fees are set for successfully representing Social Security benefits claimants in

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court.” Gisbrecht, 535 U.S. at 807. “Rather, § 406(b) calls for court review of such arrangements

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as an independent check, to assure that they yield reasonable results in particular cases.” Id. “The

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statute does not specify how courts should determine whether a requested fee is reasonable” and

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“provides only that the fee must not exceed 25% of the past-due benefits awarded.” Crawford,

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586 F.3d at 1148; see also Gisbrecht, 535 U.S. at 807 (“Congress has provided one boundary line:

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

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past-due benefits.”). The attorney seeking fees must show that the fees sought are reasonable for

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United States District Court
Northern District of California

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the services rendered. Gisbrecht, 535 U.S. at 807.
In determining a reasonable fee award under § 406(b), courts “must respect ‘the primacy of

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lawful attorney-client fee agreements,’ . . . ‘looking first to the contingent fee agreement, then

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testing it for reasonableness.’” Crawford, 586 F.3d at 1148 (quoting Gisbrecht, 535 U.S. at 793,

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808). Fees resulting from a contingent fee agreement are unreasonable and subject to reduction by

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the court “if the attorney provided substandard representation or engaged in dilatory conduct in

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order to increase the accrued amount of past-due benefits, or if the ‘benefits are large in

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comparison to the amount of time counsel spent on the case.’” Id. (quoting Gisbrecht, 535 U.S. at

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808). Although the Supreme Court has “flatly rejected [a] lodestar approach,” id., a court may

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require, “not as a basis for satellite litigation, but as an aid to the court’s assessment of the

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reasonableness of the fee yielded by the fee agreement,” submission of the requesting attorney’s

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records of the hours worked and normal hourly billing rates. Gisbrecht, 535 U.S. at 808.

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As discussed above, Mr. Pizano and Mr. Kalagian entered into a contingent fee agreement

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providing for fees of 25% of any past-due benefits awarded (Dkt. No. 35-2 ¶ 4), which is within

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the limits imposed by § 406(b). Mr. Kalagian seeks fees that are less than the 25% maximum

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allowed under the law. He successfully pursued this appeal and obtained an excellent result for

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Mr. Pizano. Nothing in the record suggests that Mr. Kalagian’s performance was substandard or

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that he engaged in dilatory conduct in order to increase the amount of fees to be awarded. Mr.

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Kalagian and the government note that Mr. Kalagian’s time records indicate that he spent a total of
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20.9 hours (i.e., 18.8 hours of Mr. Kalagian’s time and 2.1 hours of work by his paralegal) on this

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matter, yielding a de facto hourly rate of $645.93. Dkt. No. 35-5. Excluding the paralegal hours

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results in a somewhat higher de facto hourly rate of $718.09. Those de facto rates are higher than

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the billing rates indicated in time records for Mr. Kalagian ($196.79/hour) and his paralegal

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($125/hour). Dkt. No. 35-5. Gisbrecht, however, teaches that the reasonableness of the requested

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fee award cannot be made on a simple hourly rate basis, and the focus remains on the character of

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the representation and the results achieved. Gisbrecht, 535 U.S. at 808. As observed by one court

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in this district, following Gisbrecht, “district courts generally have been deferential to the terms of

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contingency fee contracts in § 406(b) cases, accepting that the resulting de facto hourly rates may
exceed those for non contingency-fee arrangements.” Hearn v. Barnhart, 262 F.Supp.2d 1033,

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United States District Court
Northern District of California

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1037 (N.D. Cal. 2003) (noting that in Social Security cases, courts have awarded fees based on de

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facto hourly rates ranging from $187.55 to $694.44). Having reviewed Mr. Kalagian’s time

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records, the Court concludes that Mr. Pizano’s past-due benefits are not disproportionate to the

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time Mr. Kalagian’s office spent on this matter and do not result in an impermissible “windfall.”

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Gisbrecht, 535 U.S. at 808. Accordingly, the requested fees are reasonable.

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III.

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CONCLUSION
Based on the foregoing, the motion for fees pursuant to 42 U.S.C. § 406(b) is granted. The

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Court awards $13,500 in fees to Mr. Kalagian. Mr. Kalagian is directed to promptly reimburse

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Mr. Pizano the $3,500 in EAJA fees previously paid by the Commissioner.

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IT IS SO ORDERED.
Dated: July 24, 2020

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VIRGINIA K. DEMARCHI
United States Magistrate Judge

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